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THE LIBRARY 
OF 
THE UNIVERSITY 
OF CALIFORNIA 
LOS ANGEERES 





“Digitized by the Internet Archive 
in 2008 with funding from 
Microsoft Corporation 


http:/Awww.archive.org/details/catechismofpolit00say} 








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CATECHISM 


POLITICAL ECONOMY: 


FAMILIAR CONVERSATIONS 


ON THE MANNER IN WHICH 


WEALTH 


Is 
PRODUCED, DISTRIBUTED, AND CONSUMED 


IN 


SOCIETY. 


—_ 


_ BY JEAN-BAPTISTE SAY, 


PROFESSOR OF POLITICAL ECONOMY IN THE ¢ arate ROYAL” OF PAUIS ; 
KNIGHT OF 5T. WOLODOMIR OF RUSSIA; MEMBER OF THE SOCIETIES OF ZU- 
RICH, BOLOGNA, Kc. AND AUTHOR OF A TREATISE ON POLITICAL ECONOMY. 


a 


TRANSLATED FROM THE FRENCH 


BY JOHN: RICHTER. 


PHILADELPHIA : 
PRINTED AND PUBLISHED BY M. CAREY & SON, 


No, 126, CHESNUT-STREET. 





May 17, 1817. 





Ib 
ADVERTISEMENT. 


THIS work does not pretend to furnish 
the means of becoming rich. It professes on- 
ly to point them out. Wealth cannot be pro- 
duced from nothing : but a clock may be made 
with wheels; and, as men may be taught to 
make a clock, so they may be taught to make 
what is called Riches. 


Many men have the materials within their 
reach, who do not suspect it; and as for those 
who have them not, is it useless even to them 
to know where they are to be found, and how 
they may be employed? 


Some men may be better able than others 
to profit by the perusal of this little Work. 


Qrisy 
q ie. f. 4 aS) 
ECONOIICS 


IV ADVERTISEMENT. 


But I venture to assert, that there is no per- 
son who may not derive from it some advan- 


tage. 


It has been asked, why I did not publish 
this Catechism, as being more elementary, be- 
fore my “ Traite d’Economie Politique.” The 
reason is evident. If I had not previously 
proved in a work of detail, by numerous ex- 
aniples and strict reasoning, that Political Eco- 
nomy, in the present state of the science, is 
only the exposition of what is passing every 
day ; and that all the facts are so intimately 
connected together, that it has become easy 
to refer to their causes, and to deduce from 
them satisfactory results, every thing must 
have been taken upon my credit ; and I am 
far from pretending to so much deference. 


An elementary work is necessarily some- 
what dogmatical. But when truths are not 
promulgated under the sanction of an ac- 
knowledged authority, it is not only necessa- 
ry to be in the right, but to prove that we are 
so. And how could these proofs have been 


ADVERTISEMENT. Vv 


established in so small a compass, and at the 
same time have been rendered intelligible to 
the uninformed ? 


This task is however no longer requisite ; 
as the proofs of every thing, which might ap- 
' pear to be mere assertion, are to be found in 
_ amore extensive work, which has been adopt- 
ed by foreigners as well as the French, and 
strengthened by the approbation of men, the 
most versed in Europe, in the practice as well 
as the theory of Values. 


Those who posses the most elevated minds 
have generally most goodness of heart. They 
will feel what a happy influence the true prin- 
ciples of Political Economy, better understood, 
are capable of exerting on the lot of man- 

kind; and perhaps they will judge, that my ~ 
"efforts to spread them are not unworthy of 
their sanction. 
J. B. SAY. 


BG 


408 


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CONTENTS. 


- On the Composition of Wealth, and 


the use of Money - - “ 


- On the Utility and Value of Products 
- On Production 4 - : 
. On the Operations common to all the 


Species of Industry - : = 


. On Capital and Land - - - 
» On the Formation of Capital - - 
- On the Manner in which the Value of 


Products is established, and of the 
Charges of Production - - 


. On the Profits of Industry, Capital, and 


Land; that is, Income - - 


. On Wages, Interest, and Rent - - 


- On Incomes founded on immaterial Pro- 


ducts 5 . ~ i 2 


- On Consumption in general - - 
. On Private Consumption - - 
- On Public Consumption — - - - 
- On Public Property and Taxes —- 


Page. 


9 
13 
16 


21 
24 
27 


34 


38 
Ag 


49 
54 
62 
66 
71 


XXII. 


XXIII. 
XXIV. 
XXV. 


CONTENTS. 


. On Public Loans. - - - - 
. On Property and the Nature of Riches 
. On Real and Nominal Price = 
XVII. 
XIX. 
eX X. 
XXI. 


On Money - - - - - 
On Signs representing Money - 
On Markets : 
On Regulations or Restraints of In- 
dustry - : - 3 i 
On Importations, Duties, and Prohi- 
bitions - 2 2 : 
On Exportation = - - : - 
On Population - - - : 


On Colonies : : ‘ ‘ 


Page. 
80 


86 
90 
96 
105 
110 


115 


120 


126 
132 


CATECHISM. 


CHAPTER THE FIRST. 


On the Composition of Wealth and the Use of Money. 


WHAT do you understand by the word, wealth 2 
Whatever has a value; gold, silver, land, mer- 
CHANGISE. 5. 3s: 
Are not gold and silver preferable to other wealth ? 
That is preferable in which the greatest value is to 
be found. One hundred and ten guineas in corn are 
preferable to one hundred guineas in gold. 
But, where the value is equal, is not the money bet- 
ter than the merchandise ? 
Tn fact, it is preferred. 


(2) 


10 ON THE COMPOSITION OF WEALTH, 


What is the reason of it ? 

‘The custom generally established of using money 
as a medium in exchanges, renders that species of 
merchandise more convenient than any other for those 
who have purchases to make; that is, for every body. 

What do you mean by money beng a medium of 
exchanges ? 

If you are a farmer, and desire to exchange a part of 
your corn for cloth, you begin by procuring money 
for your corn; then with that money you buy cloth. 

Without doubt. 

You have in reality made a double exchange, in 
which you have given corn to one man, and another 
has given cloth to you. 

That is true. 

The value of this corn was transitorily in money, 
afterwards in cloth ; and though you have in fact ex- 
changed your corn for cloth, money was the znterme- 


diate form which that value assumed in order to change 


itself into cloth. Such is the use of money. is 
Well! But if all these values are equal, why is that 
of money preferred 2 


Because, when a man once possesses money, he 
need make only one exchange, in order to obtain what 
he may want; while he who possesses every other 
merchandise, has two exchanges to make. He must, 
in the first place, exchange his merchandise for mo- 


ney, and afterwards his money for merchandise. 


AND THE USE OF MONEY. 1} 


Can you make use of any other thing for this pur- 
pose instead of money? 

Yes; there are countries in which shells and other 
articles are used; but the metals, and principally gold 
and silver, are, of all materials, the most convenient to 
be used as money. It is that which has caused them 
to be adopted by all civilized and commercial nations. 

Then in those countries in which shells are used as 
money, they are the objects which, the value being equal, 
are preferred in exchanges ? 

They are so in effect: but the precious metals are 
more sought after than the other monies, because they 
possess, as merchandise, certain advantages which in- 
crease the preference they possess as money. They 
contain much value in small bulk, which permits them 
to be easily concealed, and carried from place to place ; 
they do not spoil by keeping; they may be divided or 
reunited at will, almost without loss ; in fine, they are 
valuable all over the world: and whatever frequented 
place we travel to with this sort of wealth, we are 
sure, on more or less favourable conditions, to be able 
to exchange it for whatever we may want. 

I comprehend the reason why money, and, above all, 
money of gold and silver, is more desirable than any 
ether merchandise ; but how can we procure it ? 

As we procure every thing else that we want ; by an 


exchange when we have not a mine that produces it ; 


12 ON THE COMPOSITION OF WEALTH, &c. 


in the same way that we procure fruit when weldo not 
possess the tree that bears it. 

How can we obtain a thing in order to give it in ex- 
change for money ? 

Produce it. 

Produce a thing! But supposing that possible, how 
shall I be certain that 1 shall get money for that thing ? 

You may assure yourself of that by giving it a 
value. 

But how can a value be given to things ? 


We shall see that in the following chapters. 


CHAPTER IE. 
On the Utility and Value of Products 


WHAT do you understand by the word, Products ? 

T understand all those things to which men have con- 
sented to give a value. 

flow is value given to a thing ? 

By giving it utility. 

How is the utility of a thing the cause of its having 
a-value ? 

Because persons are then to be found who are in 
want of this thing ; they desire to have it from those 
who produce it. ‘These, on their side, will not part 
from it until they are paid the expenses they have been 
at in producing it, including their profits. ‘The value 
of the thing is established by the result of this oppo- 
sition between the producer and the consumer, 

But there are many things of great utility, and no 
value ; as, water. Why have they no value ? 

Because nature gives them gratuitouly, and without 
stint, and we are not obliged to produce them, If a 


14 ON THE UTILITY AND VALUE OF PRODUCTS 


person was able to create water, and wished to sell it, 
no one would buy it, because it could be had at the 
river for nothing. Thus all the world enjoys these 
things: but they are not riches to any body. [If all 
things that men could desire were in the same case, no 
one would be rich, but no one would be in want of 
riches, since each could enjoy all things at his plea- 
sure. 

But this is not the case: the greater part of things 
which are necessary and even indispensible to us, are 
not given to us gratuitously and unlimitedly. Human 
industry must, with pains and labour, collect, fashion 
and transport them. 

They then become products. ‘The utility, the facul- 
ty they have acquired of being serviceable, gives them 
a value, and this value 1s riches. 

When once riches are thus created, they may be ex- 
changed for ‘other riches, other values, and we may 
procure the products which we want in exchange for 
those we can spare. We have seen in the preceding 
chapter, how money facilitates this exchange. 

LI now conceive how products alone are riches ; but 
their utility does not appear to be the only cause which 
gives them value ; for there are products, such as rings 
and artificial flowers, which have value, but no utility. 

You do not discover the utility of these products, 
because you call only useful that which is so to the eye 


of reason : but you ought to understand by that word 


ON THE UTILITY AND VALUE OF PRODUCTS. 15 


whatever is capable of satisfying the wants and desires 
of man such as he is. His vanity and his passions are 
to him wants, sometimes as imperious as hunger. He 
is the sole judge of the importance that things are of to 
him, and of the want he has of them. We cannot judge 
of it but by the price he puts on them. The value of 
things is the sole measure of their utility to man. It is 
enough for us to give them utility 7 Ais eyes in order to 
give them a value. Now that is what we call to pro- 
duce, to create products. 

Recapitulate what you have said. 

Give to any thing, to a material which has no value, 
utility, and you give it a value ; that is, you make a 
product of it; you create wealth. 

One can then create wealth 2 

Incontestibly. 

L thought that man could not create any thing. 

He cannot create matter: he cannot make the laws 
which regulate nature; but with existing matter and 
the laws of nature, such as theyare, he can give a value 
to certain things, and consequently can create wealth. 

What country may be called a rich country ? 

One in which many things of value, or more briefly, 
many values are to be found; in the same manner as a 
family which possesses many of these values, is a rich 


family. 


16 


CHAPTER II. 
On Production. 


YOU have told me that to produce is to give utility 
to things: how is utility given ? How are we to pro- 
duce ? 

Tn an infinity of ways; but for our convenience we 
may arrange, in three classes, every manner of pro- 
ducing. 

What is the first manner of producing ! 

It consists in collecting or gathering together those 
things which nature creates, either without the inter- 
vention of man, such as fish and mmerals; or, such as 
men have, by the cultivation of the earth, and by 
means of seeds, induced and assisted nature to pro- 
duce. All these works are alike in their object. They 
are called Agricultural Industry. 

What utility is given to a thing by him en a ae at 
ready made to his hands ; as the fisherman, who takes a 


fish, or a miner who collects minerals ? 


ON PRODUCTION. 17 


He renders it fit for use. The fish, while it is in 
the sea, is useless.. As soon as it is brought to the mar- 
ket, we can make use of it. In like manner, it is in vain 
that coal exists in the bosom of the earth; while there, 
it is of no utility ; it neither warms us, nor heats the 


iron in the forge: it is the industry of the miner that 
makes it fit for these purposes. He creates, by ex- 


tracting it from the earth, all the value that it has when 
extracted. 

flow does the cultivator create value ? 

The materials, of which a sack of corn is composed, 
are not drawn from nothing; they existed before the 
corm was corn; they were diffused through the earth, 
the water, and the air, and had no value whatever. 
The industry of the cultivator, in taking measures to 
bring these different matters together, first under the 
form of grain, and afterwards of a sack of corn, created 
a value which they had not before. It is the same 
with all the other products of agriculture. 

What is the second manner of producing ? 

It consists in giving to the product of another indus- 
try a great value, by the new forms that we give to 
it, by the changes which it is made to undergo. The’ 
miner procures the metal of which a buckle is made ; 
but a buckle, when made, is worth more than the 
metal of which it is formed. The value of the buckle 


above that of the metal is a value produced, and the 


(3) 


18 ON PRODUCTION. 


buckle is the product of two kinds of industry: of that 
of the miner, and that of the manufacturer. This last 
is called manufacturing indystry. 
What works are included in manufacturing indus- 
try ? , e 
It includes the most ordinary as well as the most ex- 
quisite workmanship, the form given by a rough vil- 
lage artisan to a pair of wooden shoes, as well as that 
given to a piece of jewellery. It ‘includes alike the 
work executed by a single cobler in his stall, and by 
hundreds of workmen in a vast manufactory. 

W hat is the third manner of producing ? 

We produce also by buying a product in one place, 
where it is of a less value, and conveying it to another 
where it is of greater value. ‘This is the work of 
Commercial Industry. 

How does commercial industry produce utility, as it 
neither changes the form nor the substance of a product, 
which is sold just as it is bought ? | 

It acts like the fisherman, of whom we have just 
spoken: it takes a product froma place where it cannot 
be used ; froma place, at least, where its uses are less 
extensive, less precious, to a place where they are more 
so, or where its production is less easy, less abundant, 
and dearer. Wood is little used, and consequently 
of very limited utility in the mountains, where it so far 


exceeds the wants of the mhabitants, that it is some- 


ON PRODUCTION. 19 


times left to rot; this utility,* however, becomes very 
considerable when the same wood is transported into a 
city. Hides are of little value in South America, 
where they have a great number of wild animals: the 
same skins have a great value in Europe, where their 
production is expensive, and their uses much more 
multiplied. Commercial Industry, in bringing them, 
augments their value by all the difference between 
their price in Brazil and their price in Europe. 

What is comprehended under the terni commercial 
Industry ? 

Every species of industry which takes a product 
from one place, and transports it to another, where it is 
more precious, and which thus brings it within the 
reach of those who want it. _ It includes also, by ana- 
logy, the industry which, by retailing a product, brings 
it within the reach of small consumers. ‘Thus the 
grocer, who buys merchandise in gross, to re-sell it in 
detail in the same town; and the butcher, who buys 
whole beasts to re-sell them piece by piece, exercises 
Commercial Industry. 

Is there not great similarity between these different 
modes of producing ? 

The greatest. They all consist in taking a product 
in one state, and delivering it in another, in which it 

* We must never forget that, by the words ,wtility of things, we mean 


the faculty they have of serving those purposes, to which man thinks 


proper to apply them. 


20 ON PRODUCTION. 


has a greater utility and a higher value. They may be 
all reduced to one species. If we distinguish them 
here, it is to facilitate the study of their results: but 
notwithstanding: all our distinctions, it is often very dif- 
ficult to separate one kind of industry from another. A 
villager, who makes baskets, isa manufacturer; when 
he carries them to market, he becomes commercial. 
But no matter by which means, the moment that we 
create or that we augment the utility of things, we 
augment their value, we excrcise an mdustry, we pro- 
duce wealth. 

For shortness, Agricultural Industry may be called 
Agriculture; Manufacturing Industry may be called 


Manufactures ; and Commercial Industry, Commerce. 


CHAPTER IV. 


On the Operations common to all the Species of 
Industry. 


I HAVE just seen that agriculture, manufactures, 
and commerce are productive of wealth : by what means 
do they attain that end? 

An industrious undertaking, whatever it may be, is 
an enterprize in which a man decides, what part of 
the material and of the laws of the physical and moral 
world he is able to apply to the production of a use- 
ful thing. 

What do you understand by the laws of the physical 
world ? 

I understand the laws to which material beings are 
subjected ; thus, metals are softened by heat: this is 
a physical law. ‘ 

Give me an example of the use of this physical law 
in any industrious enterprize ? 

A blacksmith, who uses heat to soften a piece of 


iron of which he makes a horse-shoe, is the undertaker 


Qo ON THE OPERATIONS COMMON TO ALL 


of a manufacturing industry, who avails himself of 
that physical law ; in the same manner, the merchant, 
who fits out a vessel, uses for the purpose of sending 
it beyond seas, the power of the winds, which are 
themselves the effects of some other law of the physi- 
cal world. 

What do you understand by the laws of the moral 
world? » 

They are the rules to which we are subjected 
by the customs, the wants, and the will of man- 
kind. 

Give me an instance in which the undertaker of any 
industry consults the laws of the moral world? 

He consults them when he informs himself of the 
manners, the wants, and the legislation of men, which 
may either enable him to procure the materials for his 
industry, or furnish him with consumers of his pro- 
ducts. Some of these laws belong to the nature of | 
man, others to the manners of the country and age in 
which we live. He who takes into his calculation 
human vanity, runs little risk of deceiving himself. 
A hatter who carries on, in a proper manner, his busi- 
ness among us, has a lucrative occupation. He Would 
have gained nothing among the ancients, who did not 
wear hats. 

Who are those who study the laws of the physicat 
world 2 

Those who cultivate the physical and mathemati- 


-~ 


THE SPECIES OF INDUSTRY. 23 


cal sciences: such as chemists, naturalists, geometri- 
cians, &c. 

Who are those who study the laws of the moral 
world ? 

Those who inform themselves of morals, politics, 
history, geography, travels, &c. 

L understand: the learned serve as guides to the in- 
dustrious? 

Just so: and the work of the one, as well as the 
other, is productive, since they concur in creating pro- 
ducts. It is only in civilized and enlightened coun- 
tries that we see a very great and productive industry. 
It is there only that we find that great mass of acquired — 
knowledge, of which the industrious, the agricultu- 
rists, manufacturers, and merchants avail themselves. 

Are the learned, and the undertakers of works of in- 
dustry, the. only industrious men? 

No. There are also workmen under the direction 
of the undertakers of works of industry. When a 
workman carries on an enterprize on his own account, 
as the knife-grinder in the streets, he is both workman 
and undertaker. 


24. 


CHAPTER V. 


On Capital and Land. 


/ IS it sufficient for an undertaker of industry to have 
| the talents and judgment which constitute his industry ? 

No: his judgment and his talent would be exercised 
upon nothing. He must possess, besides those, the 
_ materials on which he would employ his industry, and 
the indispensible implements to carry it into effect. 
All these things have a value previously acquired, 
and this value is called capital. 

LI thought that capital was a sum of money, and not 
materials and utensils ? 

The value of a capital at the moment in which it is 
borrowed may have the form of money: but it has that 
form only transitorily, in the same manner that the corn 
which a producer of corn desires to exchange for 
cloth, is exchanged in the first place for money, which 
is to be again exchanged for cloth.* The values 


* See Chapter I. on the Use of Money 


ON CAPITAL AND LAND. 95 


which we save, in order to be employed as capitals, 
are, in the same manner, products which we succes- 
sively exchange for money: and when we desire to | 
use them as capital, we exchange them again for pro- 
ducts necessary to production. 

You say that capital is composed of products, that is 
_to say, of things or values produced by the industry of 
man: a capital is then always a value which is move- 
able ? 

No: the products of human industry may be either 
moveable or immoveable. A house is a product of 
human industry. In works of agriculture, besides the 
value of the land, which may be considered as a great 
and admirable instrument in the hands of man, and 
which, on this account, makes part of his capital, the 
clearings, the buildings, and the inclosures, which are 
improvements of this grand instrument, are products 
of industry. 

Are there not also moveable values in the capital of an 
agriculturist 2 

Yes: the implements of labour, the cattle, the seed, 
as well as the provisions for his family, his servants, 
and his animals ; and even the money that is destined 
for the outgoings which his undertaking requires. 

Tell me of what the capital of a manufacturer ; a 
weaver, for example, consists. 

It is composed of the value of his first material, 


which may be either cotton, flax, wool, or silk: also 


(4) 


26 ON CAPITAL AND LAND. 


of his looms, shuttles, and other implements: and, in 
fact, of every value which he is obliged to advance for 
his_own maintenance as well as that of his:workmen.” 

If the value of the capital be employed in the pur- 
chase of all these things, how is it that it is not lost 2 

Because the result of all these things is a riband or 
a cloth, the value of which reimburses the capital, and - 
pays besides, the weaver the profits of his industry. 
In the same manner, the capital of the merchant con- 
sists principally of the value of the merchandise in 
which he trades: and this merchandise, augmenting 
in value in his hands, represents at all times his capi- 
tal increased by his profits. 

How does a man, engaged in industry, know whether 

the value of his capital is inereased or diminished ? 

By an inventory; that is, by a detailed account of 
all that he possesses, in which every thing is valued 
according to its current_price. . 


27 F 


CHAPTER VIL 


On the Formation of Capital. 


I SEE that to create values, that is, riches, indus- 
trious talents and capital are necessary. I can conceive 
that industrious talents may be acquired by study and 
practice ; but how is capital to be procured? 

It must be created, or borrowed of those who have 
created it. 

How can it be created ? 

To answer this question, it is necessary to begin 
by giving some notions on consumption, although this 
is not the proper place, and it ought to be developed 
hereafter. 

What do you understand by consumption? 

Consumption is the opposite of production: it is a 
destruction of values produced. We cannot destroy 

—matter any more than we can create it; but we can 


destroy the utility that has been given to it; and, in 


28 ON THE FORMATION OF CAPITAL. 


destroying its utility, we destroy its value. That is, 
what is called “ to consume.” mi 

Ve do not wantonly destroy things of value. What 
end is proposed in doing so ? 

Kiither to procure an enjoyment, or else to re- 
produce another value. The consumption of food or 
clothing is an enjoyment: it has no other result. 
Reproductive consumption is neither so simple nor so 
easy. 

In what does it consist ? 

It consists in the industrious destruction of one va- 
lue, so as to produce another in place of that which is 
destroyed, and which exceeds the latter in value sufh- 
ciently to pay for the industry employed in the opera- 
tion. Thus the agriculturist who sows a grain of corn 
destroys the value of it: but he does not destroy it in 
the same manner as he who eats it. He destroys it 
in such manner as that it shall be reproduced with pro- 
fit: and even if he employ this grain or many grains in 
feeding fowls, he still destroys the value of this grain ; 
but as he increases the value of the fowls, he produces 
a value which usually replaces, with profit, the value 
which was consumed. This is called ceproductive 
consumption. 

Every thing that a man consumes for his own use is 
then an unproductive consumption? 

No, not all. When eatables, diiniherialenas or 


wearing apparel, are consumed by men who are at 


ON THE FORMATION OF CAPITAL. 99 


the same time employed in producing a value equal, 
or superior, to what they consume, it becomes a repro- 
ductive consumption. It is so much the more repro- 
ductive, as the value of the products, which these men 
have created during the consumption, exceeds the va- 
lue of those they have consumed. 

Give me examples of reproductive consumption drawn 

Srom manufacturing industry ? 

Besides the maintenance of his workmen and agents, 
a manufacturer consumes the materials which he trans- 
forms. He consumes, also, although more slowly, 
the utensils he employs. ‘Thus a soap-maker con- 
sumes, reproductively, oil, soda, wood, or coal, caul- 
drons, &c. and even the place and workshops in which 
he exercises his industry. 

Give me examples of reproductive consumption in 
commercial Industry ? 

A merchant consumes the value of the maintenance 
of his workmen, that is, of his carriers, lightermen, 
sailors, porters, andagents of every sort. He consumes 
also his instruments, which are carts, horses, ships, 


warehouses : and we may even consider, as part of his . ° 


consumption, the advances which he makes for the 
purchase of his merchandise. All these advances are 
restored to him by the value of the products which go 
out of his hands: that is, the merchandise in a state 


to be sold. 


All these undertakers of industry reproduce with 


_~ 


30 ON THE FORMATION OF CAPITAL. 


loss, or without either loss or gain, or with profit, 
according as they reproduce values, which are either 
inferior, equal, or superior to the values which they 
have consumed. 

What ts the effect of these facts, as respects capital ? 

That which is called productive capital, or, simply, 
capital, consists of all those values, or, if you will, all 
those advances employed reproductively, and replaced 
in proportion as they are destroyed. 

It is easy to see that this term caprtal has no relation 
to the nature or form of the values of which capital is 
composed (their nature and form vary perpetually) ; 
but refers to the use, to the reproductive consumption 
of these values : thus, a bushel of corn forms no part of 
my capital, if I employ it to make cakes to treat my 
friends : but it does form part of my capital, if I use 
it in maintaining workmen who are employed on the 
production of that which will repay me its value. In 
the same manner, a sum of money is no longer a part 
of my capital, if | exchange it for products which I con- 
sume;.but it does form part of my capital, if I ex- 
change it for a value which is to remain and augment 
in my hands. 

How is capital amassed ? 

Capital is augmented by all that is withdrawn from 
unproductive consumption, and added to a consumption 
which is reproductive. 

Can capitals that are amassed be consumed ? 

Without doubt. 


ON THE FORMATION OF CAPITAL. 31 


Can capitals be amassed without being consumed ? 

Yes, capitals, that is, values may be amassed under 
one form as well as another, in gold, silver, or mer- 
chandise, and no part of it used for production. ‘These 
are idle capitals, which may | become productive here- 
after, | but which in the mean time do not yield any of 
those profits which we shall consider presently. Ca- 
pital thus accumulated may be transferred from one 
to another by exchange or by succession; and may 
be lent in one form as well as in another, either in the 
form of merchandise or of money: but in whatever 
form it is transferred or lent, it consists in the value 
of the things transferred or lent, and not in the things 
themselves. ‘Thus when Paul, a clothier, sells cloth 
on credit to Silvan, a woollen draper, he really lends 
to Silvan the valye for which he gives him credit ; 
although this value is not lent in money, but in mer- 
chandise, and although it is to be returned not in mer- 
shandise but in money. 

Is land a capital ? 

Land is made use of in the way of capital. It is an 
instrument for which no other can be substituted, and 
by means of which we make materials for our use, an 

consequently give them a value. It may be transmit- 
ted or lent (by way of letting) as capital may: but it 
differs from capital as it is not a human production, 
but is furnished to us by nature, and is incapable of 


increase by accumulation like capital. 





9A, ON THE FORMATION OF CAPITAL. 


I comprehend that a capital, which is a mass of values 
accumulated by the care which has been taken to snatch 
them successively from improductive, and to devote them 
to reproductive consumption, belongs to him who has 
taken the pains and imposed on himself the privations of 
which it is the fruit: but why should land, whichis given 
gratuitously by nature, be the property of any one? 

It is not the object of political economy to inquire 
what may have been the origin of the right to property. 
It shews only that land, and consequently its products, 
is susceptible of appropriation, that is to say, of be- 
coming the exclusive property of such or such; and 
that this appropriation is highly favourable to pro- 
duction: for if land, and the products to be derived 
from it, did not belong exclusively to some one, no 
one would take the pains, nor make the advances ne- . 
cessary, to obtain those products; much less to culti- 
vate and enrich the soil. For the same reason it is 
useful that capital and its products should be an ex- 
clusive property ; it is the only means of inducing its 
accumulation and its productive employment. 

You have sad that land differs from capital, inas- 
much as it is not, like the latter, capable of extension ; 
* btet the, clearing, the buildings and the enclosures by 
increasing the products, are equivalent to an actual 
extension. 

The improvements which are values accumulated by 
industry on land are a capital, and the profits which 


ON THE FORMATION OF CAPITAL. 33 


_ result from the whole are the united profits of capital 
. and land. 
But how can we transfer or lend capital of this kind ? 
It can only be done by transferring or lending at the 
same time the land itself. It is for this reason that 
capital, so employed, is called an appropriated capital. 
There is, in the same manner, much capital locked up 
in many manufactories, in all the utensils and in the 
buildings which are generally much more valuable than 
the land on which they stand. Thus, when we have 
exchanged a moveable capital for a mill, a forge, or a 
house to live in, we cannot put ourselves again into 
the possession of that portion of our capital, without 
selling at the same time the land as well as the build- 
ings upon it. 

The other capital is called circulating capital. There 
is no other difference between them than that the ma- 
terials of which these respective capitals are composed, 
are more conveniently and more easily exchanged, an 


in smaller portions in the one case than in the other. 


34 


« CHAPTER VII. 


On the Manner in which the Value of Products is es- 
tablished, and of the Charges of Production. 


WE have seen how utility is given to things: we 
have seen that utility gives them value ; how is that va- 
lue fixed, the amount of which constitutes riches ? 

The utility which things have acquired, causes 
them to be sought after, to be wanted; a price is offer- 
ed for them; and when this price is sufficient to de- 
fray the expenses which their production would cost, 

Pe will be produced. 
4 Of what are the expenses of production composed ? 

Of whatever must be paid to obtain the co-operation 

» of the agents of production. 

What are the agents of production ? 

They are the means indispensably necessary for the 
creation of a product: viz. human industry ; the capi- 
tal or value which serves for that purpose; the dand - 
and other natural agents which contribute to it. 


To whom do you give the name of producers ? 


ON THE VALUE OF PRopUCTS, &c. 30 


To all those who possess any of the agents of pro- 
duction. A man who exercises an industry, and the 

af possessor of capital or of land, are producers. 

Why do you call the possessors of capital, or of land, 
producers, even when they do not labour themselves ? 

Because the capital and the land, concurring in the 
formation of products, those who furnish these means 
of production contribute to it effectually themselves. 

What do you say of him who employs his own capital 
or cultivates his own land ? 

That he contributes doubly : first, by his industry; 
afterwargls as a capitalist or landholder: but although 
these functions are often filled by one person, it is 
convenient to separate them when they are to be 
studied, in order to distinguish properly what belongs 
to each species of productive service. 

W hat is meant by the term, productive service ? 

It is the service rendered by each of the agents of 
production ; the service rendered by industry; the 
service rendered by capital ; and the service rendered 
by natural agents. 

T see what is the cause of the demand and of the pay- 

gy sins or productive services. IWVhat is it that limits 
this demand ? 

The property of the consumers, or of those who de- 
sire to use the product. There would be no bounds 
to the demand for any useful thing, if it were not to 


be paid for. There is no other effective demand than 


/ 


36 ON THE VALUE OE PRODUCTS, AND 


that which is accompanied by the offer of a price : and 
it is this price, which, in paying for the product, pays 
at the same time for the services which were necessary 
to its production. ; 

What happens when the price of the product is not 
sufficient to pay the charges of production ? 

Then the producers will not exchange their pro- 
ductive services for the price of the product; and the 
production does not take place. , 

What happens when the price of the product is more 
than enough to pay the charges of production ? 

The producers of this kind of product become more 
numerous, and their competition will cause the price 
of the product to fall. 

Can one let out or lend productive services? . 

Yes; when a man lets out his industry, the price 
which is paid for it, is called wages. When he lets 
out his capital, it is called znterest. When he lets out 
his land, the tenant is called a farmer, and the price is 
called rent. 

What do you understand by letting out industry ? 

It is to give, for hire, time, talent, and labour ; to 
¢0-operate in the creation of a product of industry. 

Who is it that hires the labour of the one, the capital 
or the land of the others ? 

It is an undertaker of industry who unites all these 
means of production, and who finds in the value of the 


products which result from them, the re-establishment 


THE CHARGES OF PRODUCTION. OF 


of the entire capital he employs, and the value of the 

wages, the interest and the rent which he pays, as 
well as the profits belonging to himself. 

What happens when the value of the products he has 
created, is not sufficient to pay for all that ? 

He loses, if he has any thing to lose: or if he has 
nothing, those lose who haye. given him their confi- 
dence. 


38 


CHAPTER VII. 


On the Profits of Industry, Capital, and Land; that 


2s, Income. 


WHAT is the source of the profits of industry, cap- 
atal, and land ? : 

It is in the price of the products created by their 
co-operation. ‘The consumer, in buying a product, 
pays all the charges of its production; that is, the 
services of the producers (the industrious, the capital- 
ists, and the landholders), who have contributed to its 
production, 

How can these profits, paid by a single consumer, be 
distributed among the different producers 2 

By the advances which the producers make of them 
to one another. 

Lacplain that by an example. 

Let us examine how the value of a cloth coat is dis- 
tributed among the producers of the stuff of which it 
is made. We see that a farmer who has reared a sheep, 


has paid a rent to the landholder who let him the land 


ON THE PROFITS OF INDUSTRY, &C. 39 


on which the sheep was fed. That is, a profit received 
for the productive service of the land. If the farmer 
have borrowed the capital necessary for the cultivation 
of his farm, the interest which he pays for it, is_ano- 
ther profit, received by a capitalist, for the productive 
service of his capital. When the farmer has sold his 
wool, the price which he receives for it, reimburses 
him the rent and interest he has paid, and also the 
profits of his industry. The clothier, in his turn, by 
means of his capital, advances this value, which is 
already distributed. If his capital be a borrowed one, 
and he pay interest for it, he pays also in advance the 
profits of the capitalist who lent it to him; and he ts 
reimbursed the whole, together with his profits, by the 
woollen draper, who is at last reimbursed for his ad- 
vances and his profits by the sale which he makes to 
the consumer. ‘Thus at the time the sale of the cloth 
was accomplished, the value had already been distri- 
buted among its different producers. 

In thus tracing the progress of any product what- 
ever, we shall find that its value is scattered among a 
crowd of producers, many of whom, perhaps, are ig- 
noran tof the existence of the product: so that the man 
that wears the coat is, perhaps, without suspecting it, 
one of the capitalists, and consequently one of the 
producers, who have contributed to its formation. 

Is not society then divided into producers and con- 


sumers 2 


40 ON THE PROFITS OF INDUSTRY, 


Every body consumes, and almost every body pro- 
duces. For, not to be a producer, it is necessary 
neither to exercise any industry, nor any talent, nor 
to possess either the smallest portion of land or of 
productive capital. 

What do the profits, distributed among society, be- 
come ? 

They compose the income of each individual ; and 
the incomes of all the individuals which form a nation, 
compose the total income of that nation. 

What is called annual income ? 

It is the sum of all the portions of income received 
in the course of a year. The annual income of a whole 
nation, is the sum of all the portions of income receiy- 
ed, in the course of a year, by all the individuals of 
which that nation is composed. 

Are incomes paid at fixed periods ? 

Some of them are so; some not. A landholder who 
lets his land, a capitalist who lends his capital, -and 
who thus gives up to another the profits which may 
result from these agents of production, generally sti- 
pulate the condition of receiving the rent or interest, 
which forms their income, at fixed periods. The work- 
man, who lets out his industrious talent, receives the 
wages which form his income by portions, every week 
or every fortnight. But the grocer, who sells sugar 


and coffee, receives on each ounce that he sells, a small 


CAPITAL AND LAND. Al 


portion of his profit: and all these united profits form 
his income. | 

Are incomes, or portions of come, always paid in 
money ? 

The manner in which they are paid, has nothing to 
do with the subject. The corn, vegetables, milk, and 
butter, which a farmer consumes in his own family, 
form part of his income. Ifhe pay part of his rent in 
provisions, these provisions form part of the income 
of the landlord. The essential thing is the value paid. 
Whether this value be paid in provisions, or whether 
he that owes it, exchange these provisions for money, 
in order to pay the value in money, is of no import- 
ance. It is the value acquired, under whatever form, 
for a productive service, that constitutes income. 

As the incomes of individuals are so much the more 
considerable as their profits are greater, and as their 
profits are greater when their productive services are 
better paid, it appears to me that the dearer these pro- 
ductive services are, the greater the total income of 
that nation must be. 

Yes: but when the productive services are dearer, 
so are the products; and when the price of the pro- 
ducts augments in the same proportion as the in- 
comes, the augmentation of the income is only nomi- 
nal. When the charges of production have doubled, 
we can, with an income nominally double, only pur- 


chase the same quantity of products. That alone really 


(6) 


t 


42 ON THE PROFITS OF INDUSTRY, &c. 


increases the ease of individuals and of nations, which 
lowers the value of products without decreasing in- 
comes. 

In what circumstances is this advantage eaxperien- 
eed ? 
_ [tis when, by a better employment of the means 
of production, the products are multiplied, without 
increasing the charges of production. Then the pro- 
ducts fall, and incomes remain the same. This is what. 
takes place when a new and ingenious machine has 
been brought into use, such as the stocking frame 
and the cotton spinning machines; and when a new 
canal has been cut, which, without increasing the 
charge, permits the transport of ten times, or a hun- 


dred times, more merchandise, &c. 


43 


CHAPTER IX. 


On Wages, Interest, and Rent. 


WHAT do you observe on the wages of workmen, 
interest of capital, and rent of land? 

That he who lets out his industry, his capital, or 
his land, renounces the profits he might have drawn 
from their productive services. He renounces them 
in favour of an undertaker of industry, who hires them, 
and who draws, from these means of production, a 
profit which is either superior, or equal, or inferior, to 
what he pays for them. 

What causes raise the rate of wages ? 

The abundance of capital and land compared with 

/the number of workmen: for there must be land, and, 
above all, capital, in order to employ workmen. 

Why is it that wages scarcely ever exceed what is 
necessary to maintain a workman and his family, ac- 
cording to the custom of the place ? 


Because wages, by rising higher, encourage an in- 


> 


4A, ON WAGES, INTEREST, 


crease of workmen; this occasions such services to be 
more offered in proportion to the demand for them. 
Works, which require rare and distinguished talents, 
are exceptions to this rule; because such talents can- 
not always be increased according to the demand for 
them. 

What causes influence the rate of interest ? 

The interest of capital lent, although expressed by 
one price only, a certain per centage on the capital 
lent, ought really to be distinguished into two parts. 

Explain this by an example. 

Tf you lend a sum of money, and agree with the bor- 
rower for an interest of six per cent. per annum, there 
is in this rate, four per cent. (more or less), to pay for 
the productive service of the capital, and two per cent. 
(more or less) to cover the risk that you run of never 
getting your capital back. 

On what do you found this presumption ? 

On this, that if you were enabled to lend the same 
capital with perfect security, on a very safe mortgage, 
you would lend it at four per cent. more or less. The 
surplus is then a species of premium of insurance 
which is paid to you to indemnify you for the risk that 
you run. 

Setting aside the premium of insurance, which varies 
according to the greater or less solidity of the parties, 
what are the causes which vary the rate of interest, 


properly so called ? 


AND RENT. Abd 


‘The rate of interest rises when those who borrow 
have numerous, ready, and lucrative employments for 
capital ; because then many undertakers of industry 
are desirous of participating in the profits which these 
employments of capital offer; and capitalists are also 
more likely to use them themselves, which augments 
the demand for capital, and diminishes the amount 
which is offered for employment. The rate of interest 
increases also, when, from whatever cause, the mass of 
disposable capital, that is, of capitals requiring to be 
employed, has been diminished.* Contrary circum- 
stances lower the rate of interest; and one of these 
circumstances may so balance the other, that the rate 
of interest will remain at the same point, because the 
one tends to heighten, precisely as much as the other 
to lower, the rate. 

When you say that the mass of disposable capital in- 
creases or diminishes, do you mean by that the quantity 
of money ? 

By no means : I mean values destined by their pos- 
sessors to reproductive consumption, and which are 
not so engaged that they cannot be withdrawn in order 
to use them differently. 

Explain that by an example ? 


* See some striking examples in my T'reatise on Political Economy, 


liv. ii. chap. 8. 


A6 ON WAGES, INTEREST, 


Suppose you have lent funds to a merchant on con- 
dition of his paying them back to you on giving him 
three months notice; or, which comes to the same 
thing, that you are in the habit of discounting bills of 
exchange, can you not easily employ these funds in a 
different way, if you find any one more convenient to 
you? 

Without doubt. , 

Then these funds are a disposable capital. They 
are so, too, if they be in the form of a merchandise 
easily sold, since you can exchange them readily for 
any other value. They are still more disposable if 
they be in specie. But you must understand that the 
sun of all these disposable capitals is a very different 
thing from the sum of coined money, and that it may 
be much more considerable. 

L understand so. 

Well! it is the sum of these capitals which influen- 
ces the rate of interest, and not the sums of money 
under which form these values temporarily present 
themselves when they are about to pass from one 
hand to another. A disposable capital may be in the 
form of a certain sort of merchandise, a sack of guineas 
for instance: but if the quantity of this merchandise 
which is in circulation, have no influence on the rate 
of interest, the abundance or the scarcity of the gold 
has no influence on it either. 


AND RENT. AT 


It is not then really the hire of money that one pays 
when one pays an interest 2 
By no means. 
Why is it called the interest of money ? 
From very inaccurate ideas which are formed of the 
ature and use of capital. 
What is legal interest 2 
It is the rate fixed by the law in cases where it has 
not been fixed by the parties : as when the holder of a 
capital has enjoyed it in the place of an absentee, or a 
minor to whom he is bound to account. 
Cannot public authority fix a limit to the interest 
which individuals may agree upon ? 
It cannot, without violating the freedom of transac- 
tions. 
What causes influence the rent of land ? 
The demand for the hire of farms compared with 
4, the number to be let. It may be observed on this 
a subject, that the demand commonly exceeds the num- 
& ber to be let; because in all countries the number of 
= Ahese i is necessarily limited ; while that of farmers and 
of capitals, which may be applied to this industry, are 
not necessarily so : so that i those places, where there 
are not stronger motives to a contrary effect, rent Is 
rather above than below the real profit of land. 
What have you more to say on this subject ? 


That rent tends nevertheless to get down to the pro- 


AS ON WAGES, INTEREST, AND RENT. 


fit of land; for when it exceeds that profit, the farmer 
is obliged to pay the excess, either out of the profits 
of his industry, or the interest of his capital ; and is no 
longer completely indemnified for the employment of 


those means of production. 


49. 


CEAPT ERX. 


On Incomes founded on immaterial Products. 


What is meant by immaterial products ? 

They express a utility produced, but which is not 
attached to any material. 

Explain this by an example. 

When a physician visits a sick person, and pre- 
scribes a remedy, or a regimen, which cures him, he 
renders himself useful to him. The physician receives 
a sum of money in exchange for this utility: but here 
the utility is not attached to any merchandise where it 
may be preserved for a time, and exchanged again. 
It is a product truly immaterial, in exchange for which 
the phy sician receives a fee which constitutes his in- 
come. ‘The industry of the physician is analogous to 
that of every undertaker of an industry. He applies 


to the wants of men the medical knowledge which he 
has collected. 


CF) 


50 ON IMMATERIAL PRODUCTS. ’ 

What other professions found their incomes on imma- 
terial products ? 

There are a great number of them. They include 
the most elevated as well as the most abject situations 
in society. The public functionaries, from the chiefs 
of the government down to the lowest officer, the 
judges and the priests, receive in exchange for their 
usefulness to the public, fees paid at the expense of 
the public. 

W hat causes influence the amount of these fees ? 

As these fees are never the result of, a free agree- 
ment, but depend on political circumstances, they are 
seldom proportioned with exactness to the utility pro- 
duced. 

Give me some other examples of industry productive 
of immaterial products. 

An advocate, an actor, a musician, a soldier, a do- 
mestic, render services of which the value may be 
measured by the price which they receive. 

What do you observe respecting immaterial products ? 

That they are necessarily consumed at the same 
instant they are produced. Their value, consequent- 
ly, cannot be reserved for consumption at any other 
oe time, or to be employed as capital, because they are 
not attached to any material by means of which they 
can be preserved. | 

What consequence do you draw from that? 

That in multiplying the services rendered by these 


ON IMMATERIAL PRODUCTS. 51 


different. classes, the consumption of them is multi- 
plied: that it hinders these kinds of works from con- 
tributing to the increase of the mass of wealth. It 
follows from this, that in multiplying, for example, 
placemen, lawyers, soldiers, &c. the wealth ofa coun- 
try is not increased, whatever may otherwise be the 
utility of these different professions. The services 
they render exist no longer tieg the moment they are 
performed. a 
They live then on the incomes of other producers ? 
They live no more on the incomes of other pro- 
ducers than a wine merchant lives on the income of a 
woollen draper, who buys wine which he pays for 
with part of his income, and afterwards consumes. An 
actor is a dealer in amusement; a spectator buys his 
commodity, pays for it out of his income, and con- 
sumes it the instant it is delivered to him. The pro- 
ducts furnished by the actor and by the wine merchant, 
are equally lost; but when the price which has been 
given to them for it, has been freely paid, it is an ex- 
change, like all others, followed by a consumption of 
the same nature as all improductive consumptions. 
Are immaterial products the fruit of industry 
alone ? | | 
Yes, when nothing has been advanced to acquire 
the talent of which they are the fruit: but when this 


talent has required long and expensive studies, they 


52 ON IMMATERIAL PRODUCTS. 


are the result of an appropriated capital,* that is to 
say, of advances which have been made of industry. 
One part of the fees then serves to pay the life interest 
in this capital, and another to pay for the industry 
exercised. When the fees, or gratuities, are not suf- 
ficient to pay for the service of these two agents of 
production, their product becomes more scarce, and 
its price increases until the moment when the quantity 
of that product is rendered equal to the demand. 

Are there any immaterial products which are the re- 
sult of capital alone? 

Yes, if moveable effects (household furniture) be 
considered as capital, and if they be kept up to their 
original value. When their value is not kept up, be- 

sides the use of the capital, a part of the capital itself 
is consumed. 

The plate which is used in a family forms part of 
the capital and riches of that family. It is not impro-— 
ductive, since it renders a daily service: but it does 
not produce any value which can afterwards be ex- 
changed for any other thing. This service is an im- 
material product consumed at the moment. The 
family consumes the interest of this part of its capital. 


* It must be remembered, that an appropriated capital is a capital which 
cannot be withdrawn from the employment to which it has been applied, 
to be applied to another employment. 


ON IMMATERIAL PRODUCTS. 53 


Are there any immaterial products which result from 
land 2? 

Yes: the enjoyment received from a pleasure gar- 
den, is a product of the land of this garden and the 
capital devoted to its arrangement. It has no other 
exchangeable product. 


54 


CHAPTER Ak 


On Consumption in general. 


WE have already seen what consumption is: fish 
the development of its effects. 

It must be remembered that to consume is not to 
destroy the matter of a product: we can no more de- 
stroy the matter, than we can create it. To consume 
is to destroy its value by destroying its utility ; by de- 
stroying the quality which had been given to it, of be- 
ing useful to, or of satisfying the wants of man. ‘Then 
‘the quality for which it had been demanded, was de- 
stroyed. The demand having ceased, the value, which 
exists always in proportion to the demand, ceasesvalso. 
The thing thus consumed, that is, whose value is de- 
stroyed, though the material is not, no longer forms 
any portion of wealth. 


A product may be consumed rapidly, as food; or | 


ON CONSUMPTION IN CENERAL. 55 


‘slowly, as a house. It may be consumed in part, as a 
coat, which, having been worn for some months, still 
retains a certain value. In whatever manner the con- 
sumption takes place, the effect is the same: it isa 
destruction of value ; and as value makes riches, con- 
sumption is a destruction of wealth. 

What is the object of consumption 2 

To procure to the consumer either an enjoyment 
or a new value, in general superior to the value con- 
sumed ; otherwise the consumer would not obtain any 
profit. In the first case, it is an ¢mproductive, and in the 
second a reproductive consumption. 

What would that consumption be which had for its ob- 
ject neither to procure an enjoyment, nor to create a new 
product ? 

That would be a sacrifice without compensation ; a 
folly. 

What must be thought then of a system, the tendency 
of wluch is, to consume for the sole purpose of favour- 
ing production? 

That which must be thought of a system which 
should propose to burn down a city, for the purpose 
of benefiting the builders, by employing them to re- 
store it. 

Develope what relates to reproductive consumption. 

Every thing which has been said on production, 
serves for that purpose. 


es 


56 ON CONSUMPTION IN GENERAL. 


What have you to say on the subject of improductive 
consumption ? , 

Improductive consumption, which we shall hereaf- 
ter, for brevity, call simply consumption, divides itself 
ania two kinds, private and public. 

What do you understand by private consumption ? 

That which has for its object to satisfy the wants of 
individuals and of families. 

What do you mean by public consumption ? 

That which has for its object to supply the wants 
of men whose association forms a community, a pro- 
vince, or a nation. 

Are these two sorts of consumption of the same na- 
ture? | 

They are entirely of the same nature, and their 
effects are the same. One set of persons cause the 
consumption in one case, and other persons in the 
other; that is all the difference. 

W hat is meant by the words, annual consumption of 
a nation ? ! 

It is the sum of the values consumed by a nation in 
a year, whether for the wants of individuals or of the 
public. 

Do these words comprehend reproductive consumption 
as well as the others ? 

Yes: for we may say that France consumes annually 
so many quintals of soda or of indigo, although the 

—-> 


ON CONSUMPTION. aot 57 


indigo and the soda can only be consumed reproduc- 
tively, as they cannot satisfy directly any want: and 
as they can be employed only in the arts, they serve 
necessarily for reproduction. 

Do you comprehend, in the consumption of a nation, 
the merchandise she exports to other countries ? 

‘Yes; and I comprehend in its products whatever it 
receives in return; in the same manner that I compre- 
hend in its consumption the value of the wool it uses 
for the manufacture of cloth, and in its productions 
the value of the cloth which results from it. 

Does a nation consume all that it produces ? 

Yes, with very few exceptions ; for it is our interest 
not to create products unless they are demanded: and 
they are never demanded but to be consumed. 

Lf a nation consumes the total of the values which wt 
produces, how can it accumulate values, form capital, 
and maintain it ? 

The values, which serve the purposes of capital, 
may be consumed perpetually, yet are never lost: for 
in the same proportion as they are consumed, they are 
reproduced under new forms, by the action of indus- 
try. This reproduction, once accomplished, if the 
value reproduced be found superior to the value con- 
sumed, there has been an augmentation of capital ; 
in. the contrary case, a arian, of capital. If the 


(8) 


58 ' ON CONSUMPTION, 


reproduction have simply equalled the consumption, 
the capital has been merely kept up.* 

Shew me the application of these truths by exam- 
ples. 

Take, for instance, a farmer, or a manufacturer, or 
even a merchant. Suppose that he employs in his 
enterprize a capital of twenty thousand pounds, that 
is to say, suppose that all the values that he has in 
his enterprize on the first day of a year, are equal in 
value to a sum of twenty thousand pounds. In the 
course of his operations, these values change their 
forms perpetually ; and although his capital does not 
exceed twenty thousand pounds, yet we may suppose, 
that if all the values which he has consumed in the 
course of the year, were added together, they would 
amount to sixty thousand pounds; because a valve 
destroyed may have been reproduced, destroyed again 
a second and a third time, before the year revolves. 
We may suppose also, that if all the values produced 
in the same year were added together, they might 


amount to a sum of sixty-four thousand pounds. If 


* In the amount of reproductive consumption, the profits of all the 
industries employed, even that of the undertaker, must always be includ- 
ed. When all the charges of production, (the profits included), are paid, 
and the capital is not completely re-established in its full value, the con- 


sumption exceeds the reproduction : there is a loss. 


ON CONSUMPTION. 59 


then this undertaker of industry has had consumption 
for sixty thousand pounds, and productions for sixty- 
four thousand pounds, he ought to have at the end of 
the year values amounting to four thousand pounds 
more than he had at the beginning. 

That appears clear. 

Let us goon. Ifhe have expended improductively 
in the same year, to satisfy the wants of his family, 
four thousand pounds, he will have consumed his pro- 
fits: and if he take his inventory, he will find himself, 
at the end of the year, with a capital of twenty thou- 
sand pounds only, as he had at the beginning of the 
year. But if, instead of having expended improduc- 
tively, for the support of his family, four thousand 
pounds, he had only expended two thousand, unless 
he has hid two thousand pounds, he will find that this 
value of two thousand pounds, which has not been 
expended improductively, will have been laid out pro- 
ductively, and that it will appear in his inventory in 
augmentation of capital under some form or other, 
either under that of provisions, of goods in process of 
manufacture, or even of advances capable of being 
recovered. 

LT conceive that. 

You perceive then, that although the value of the 


capital has not been more than twenty thousand 


60 ON CONSUMPTION. 


pounds, the total value of the products for the year 
may have been much more considerable? 

Yes. ! 

That this form of products, whatever it may be, 
may have been entirely consumed; and that, never- 
theless, the capital of this individual may have been 
augmented ? , 

Yes. | 

Well, then, multiply in your mind what has hap- 
pened to a single individual, and suppose the same 
thing to have happened to all the individuals of the 
same nation: or at least suppose that the consequen- 
ces that have happened to some, balanced by those 
which have happened to others, have produced a gene- 
ral result analogous to the preceding example; and 
you will find, by a second example, that a nation 
which had at the commencement of the year, a capital 
of a hundred millions, may have consumed in a year 
three hundred millions of values, producing three 
hundred and twenty millions of values, of which she 
has consumed reproductively three hundred millions, 
and improductively twenty millions; or rather repro- 
ductively three hundred and ten millions, and impro- 
ductively ten millions, 


I grant it. 


In this last supposition, this little nation, which 


ON CONSUMPTION. 6i 


will have consumed all its productions, will, never- 
theless, be enriched during the year ten millions of 
values, which will be found distributed under differ- 
ent forms among those individuals who have conduct- 
ed their affairs with the greatest intelligence and eco- 


nomy. 


62 


CHAPTER. XIL 


On private Consumption. 3 » 


WHAT difference is there between the words, Ex- 
pense and Consumption ? 

Expense is the purchase of a thing to be consumed : 
and as, in general, people only buy what they intend 
to consume, the words expense and consumption are 
often used for one another. It is, however, proper to 
remark, that when we buy a product, we exchange the 
value we are willing to give up for one of which we are 
in want: the value of a crown, for instance, for the 
value of a handkerchief. We are still as rich when we 
have made the purchase as we were before ; only we 
possess in the form of a handkerchief what we before 
had in the form of a crown. We do not begin to lose 
this value until we begin to use the handkerchief: and 
it is only when the consumption is finished, that we are 
poorer by a crown. It is not then in buying, but in 


consuming, that we dissipate our property. ‘That is 


ON PRIVATE CONSUMPTION. 63 


the reason why, in the middle ranks of life, the charac- 
ter and economical talents of the woman, who directs 
the greater part of the consumption of the family, as- 
sists materially to preserve fortunes. . 

WV hat do you understand by economical talents ? 

It is the talent of deciding judiciously what con- 
sumption may be permitted, and what must be prohi- 
bited, in that state of fortune in which we are placed, 
and according to the income we have. 

W hat do you understand by avarice ? 

We are avaricious when we deprive ourselves, or 
those dependent upon us, of those consumptions which 
we might permit according to our incomes. 

Is it avaricious not to expend the whole of one’s in- 
come ? , 

No: for it is only by the savings which are made 
from improductive consumption, that we can hope to 
enjoy repose in our old days, and to procure an esta- 
blishment for our families. 

Do we do any wrong to society by thus amassing a 
productive capital, for the sake of enjoying ourselves, or 
suffering those belonging to us to enjoy, the profits it will 
produce ? 

On the contrary, capitals accumulated by indivi- 
duals, add so much to the total capital of society ; and 
as a capital placed, that is, employed reproductively, 
is indispensably necessary to give activity to industry, 
eyery person who spares from his revenue to add to his 


64 ON PRIVATE CONSUMPTION. 


capital, procures, to a certain number of persons whe 
have nothing but their industry, the means of deriving 
a revenue from their talents. 
Are not some consumptions better managed than 
others 2 
Yes: they are those which procure greater satis- 
faction, in proportion to the sacrifice of the values 
which they occasion. Such are the consumptions 
which satisfy the real, rather than fictitious, wants. 
Wholesome food, decent clothing, convenient lodg- 
ings, are consumptions more fitting and better regula- 
ted than luxurious food, foppish clothing, and stately 
habitations. More true satisfaction results from the 
first than the last. 
What do you consider, besides, as well regulated con- 
sumptions ? 
The consumption of products,of the best quality of 
every sort, although they may cost more. 
For what reason do you consider them as well regula- 
ted consumptions 2 
Because the workmanship employed on a bad article 
will be more quickly consumed than that on a good 
one. When a pair of shoes is made with bad leather, 
the work of the shoemaker, which is used up in the 
same time as the shoes, does not cost less, and is con- 
sumed in fifteen days, instead of lasting two or three 
months, which it would have done if the leather had 


been good. The carriage of bad merchandise costs 


ON PRIVATE CONSUMPTION. 65 


as much as that of good, which is more advantage- 
ous. Poor nations have, consequently, beside the 
disadvantage of consuming less perfect productions, 
that of paying dearer for them in proportion. 

What consumptions do you consider as the worst re- 
gulated ? 

Those which procure more chagrin and mischief 
than satisfaction: such as the excess of intemperance, 
and expenses which excite contempt, or are followed 


by punishment. 


66 


CHAPTER -XIIIx 
On Public Consumptions. 


IW} HAT do you call public consumptions? 

Those which are made for the service of men, as- 
sembled in communities, provinces, or nations. It is 
the purchase of services and products, consumed for 
public utility, which constitutes the public expenses. 

What are the principal objects of public expenses? 

The payment of the administrators of the govern- 
ment, the judges, soldiers, and professors in the pub- 
lic institutions; the providing for the army and navy, 
and maintaining the public establishments, edifices, 
roads, canals, ports, hospitals, &c. 

What do you observe generally with respect to pub- 
he expenses ? | 

That the public is never so cheaply served as indi- 
viduals. 

W hat are the reasons? 


There are three. First, that political circumstances 


ON PUBLIC CONSUMPTIONS. 67 


fix the number and salaries of the public functionaries, 
and that their services are consequently not open to a 
free competition. The second, that those who direct 
the public expenses, devoting to them money which 
is not their own, are less sparing of it than individuals 
would be. The third, that works executed for the 
public, are easily superintended, and are never watch- 
ed by personal interest. 

_ Lam inelined to believe that public consumptions, by 
returning to society the money which has been drawn 
JSrom it, do not impoverish it. 

They do impoverish it the same as private con- 
‘sumptions, by the whole amount of the values con- 
sumed. 

flow do you explain this ? 

The money is wrested from the people without 
equivalent. A value is taken away from the commu- 
nity, without its receiving any other value in return. 
But when this money is returned to the community, it 
is not gratuitously. It is in virtue of a purchase in 
which the seller delivers to government, or its agents, 
things which have a value. The community has twice 
delivered the same value. It has delivered the contri- 
bution, and also the merchandize, which the govern- 
ment has bought with the amount of that contribution. 
Of these two values, the one is returned by the pur- 
chase which the govorument has made; the other is 
never returned at all: it is consumed, that is to say, it 


is destroyed. 


68 ON PUBLIC CONSUMPTIONS. 


Illustrate this by an example ? 

We will suppose that a community pays in money 
a hundred thousand pounds; there is a value equal to 
one hundred thousand pounds drawn from the com- 
munity. The agents of the government, with this 
sum, purchase clothes for the army; this is another 
value equal to one hundred thousand pounds drawn 
from the community. The government, in paying the 
clothier, restores the one hundred thousand pounds it 
had raised by contribution: but the value of the one 
hundred thousand pounds in clothes is not restored, 
and will be consumed and lost. It is the same case 
with that of a man who draws from the community 
his revenue in money, and returns it back by means of 
his expenditure; but who does not return the proyi- 
sions he has purchased with his revenue, and which 
he has consumed. 

But when a government constructs buildmgs, and 
with the amount of the contributions pays the workmen, 
does it not then restore to society the values which tt 
has drawn from it? 

Notan atom more. It draws from society, in this 
last case, one value in contribution, and then another 
value equal to it in services which it consumes. The 
purchase of the services is not a restitution, but an 
exchange. 

Is not this amere distinction of words, and is not the 


purchase of services equivalent to a restitution 2 


ON PUBLIC CONSUMPTIONS. 69 


Not in the least. When the government employs 
workmen, it receives from them in exchange for their 
wages a real value, which is their labour; a value 
founded on the products which are to result from this 
labour; a value, which being consumed by the go- 
vernment, cannot be consumed in any other design, 
nor with any other result. 

The workmen thus employed would have perhaps 
been without work ? 

Why ? The government by this operation has not 
multiplied the values appropriated to the payment of | 
workmen. [If it distribute them on the one hand, it 
takes away from the contributor on the other, the 
power of distributing them, either directly by employ- 
ing the workmen himself, or indirectly, by means of 
his consumptions. 

When a government consumes, it stands then in the 
same situation with any other consumer ? 

Almost always. The exceptions to this rule are too 
rare to be worth noticing. 

What consequences do you draw from it ? 

Thatthe consumptions, or, if you will, the expenses 
of government, are always a sacrifice made by society, 
which is never indemnified for it, otherwise than by 

_ the product which results from it. 

W hat do you mean by a product resultiug from public 

expenditure ? 


When the government constructs a bridge, the ser- 


70 ON PUBLIC CONSUMPTIONS, 


vice which the public derive from it, repays, and often 
with very greatadvantage, the sacrifice of values which 
the bridge has cost... : 

When a part of the contributions ts employed in the 
construction of monuments or buildings, which have no 
public utility, there is then on the part of society a sacrt- 
fice witout compensation ? 

Precisely : it is for that reasnn that a good govern- 
ment makes no expenditure which has not a useful re- 
sult. The economy of nations is exactly the same 


with that’of individuals. 


71 


CHAPTER XIV. 


On Public Property and Taxes. 


FROM whence are the values derived which serve 
Sor the public consumptions? 

They are derived either from the revenues of pro- 
perty belonging to the public, or from taxes. 

What constitutes the revenues of public property? 

‘These properties are either, capital or freehold pro- 
perty; but most generally, freehold property, land, 
houses, &c. which the government let, and the reve- 
nue of which it consumes for the advantage of the 
public. When it consists of forests, it sells the annual 
felling ; when capital, it lends it at interest: but thig 
last case is very rare. 

Who is it that pays the taxes ? 

The individuals whom, in this respect, we call cov- 
tributors. 

Where do the contributors get the values with which 
they pay the taxes ? 

They take these values from the products which 


te QN PUBLIC PROPERTY. 


belong to them, or, which comes to the same thing, 
from the money which they procure by the exchange 
of these products. 

Are these products the fruit of the annual productions ? 

They are sometimes the products of the year, which 
form part of the income of individuals, and sometimes 
former products, which they employ as productive 
capitals. | 

{In what case do the contributors take from their — 
capitals to pay the taxes ? 

When their incomes are not sufficient. And in this 
case, the taxes dry up one of the sources of revenue, 
and one of the means of the industry of society. 

Give me an example in which the taxes are dis- 
charged with a portion of capital. 

If a man whose income is absorbed by the ordinary 
contributions, together with the maintenance of his 
family, come to an heritance, and, as an heir, he be 
bound to pay impost, it must be taken out of his in- 
heritance. The capital in the hands of the heir is there- 

.fore no longer so considerable as it was in the hands 
of the deceased. Similar observations may be made 
on the expenses of proceedings at law, bonds, secu- 
rities, &c. In all these cases, the tax paid by the con- 
tributor, is withdrawn from the mass of capital usefully 
employed, and is so much capital devoted to consump- 
tion, and actually disappears. This happens also in 


cases where the profits are small and the impost con- 


AND TAXES. 73 


siderable; many contributors cannot in that case 
discharge the taxes without breaking in upon their 
capitals. 

The major part of the taxes are however taken from 
mcomes ? 

Yes: for if the taxes dry up too completely the 
sources of production, they would diminish more and 

more every day the products with which alone they 
could be paid. 

If there be some of them which break into the capital . 
of individuals, how happens it that the means of produc- 
tion are not destroyed.in the long run? 

Because at the same time that some individuals 
break into their capitals, those of others are increased 
by saving. 

Do not the taxes serve, on the other hand, to multi- 
ply products by compelling the contributors to produce, 
m order to be able to pay them ? 

The hope of enjoying the products one has created 
is a much stronger incitement to production than the 
idea of satisfying the tax gatherer. But if the impost 
should excite the desire of producing more, it does 
not afford the means. In order to extend production, 
it is necessary to increase capital, which is the more 
impossible, as the necessity of paying the tax prevents 
the saving, which alone creates capital. In short, if 
the necessity of paying the taxes should excite efforts 


which augment production, there will not result from 
(10 ) 


74, ON PUBLIC;+PROPERTY. 


it any increase of the general riches; since what is 
raised by the impost, is consumed, and does not serve 

_to increase any saving, ‘Thus it may be seen, that 
great taxes are destructive of public prosperity instead 
of being favourable to it. | 

Which are the principal kinds of taxes levied for 
this purpose ? 

Sometimes they are exacted from the contributors 
at so much per head, as in the capitation tax. Some- 
times, as in the land tax, they take a part of the reve- 
nue arising from the lands; which are valued, either 
after the actual rent or after the extent and fertility of 
the soil. Sometimes the rent of a house, the number 
of its doors and windows, and of the servants and horses 
kept by the contributor, serve as a basis for the amount 
of his contribution, Sometimes, his profits are valued 
according to the industry he carries on: from hence 
the impost on licences (patentes.) All these contribu- 
tions bear the name of direct taxes, because they are 
demanded, directly, of the contributor in person. 

Are not all taxes demanded directly from the contri- 
butor ? . 

They are sometimes demanded, not from the payer, 
but are included in the price of the merchandize on 
which the impost is laid, and without the receiver 
knowing even the name of the contributor. For this 
yeason they are called indirect taxes. | 

When and in what manner are taxes levied on mer- 
chandize ? 


- 


AND TAXES. a3 


They are sometimes levied at the instant in which 
they are produced, like the salt in France, or the gold 
and silver mines in Mexico. A portion of the value 
of these merchandizes is levied at the moment of their 
extraction. Sometimes a duty is levied at the moment 
of their transportstion from one place to another, as 
in the instance of import duties; and in the “ Octroi,” 
which is paid in France at the entrance of towns: 
sometimes at the moment of consumption, as for 
_ Stamps and admissions to the theatres. 

Does the amount of the impost remain at the expense 
of those who pay it 2 

No: they endeavour to reimburse themselves at 
least in part from those who purchase the products in 
the creation of which the contributors have assisted. 

Do the contributors always succeed in thus shifting 
the burden from themselves ? 

-Theyseldom succeed completely ; because they can- 
not do so without raising the price of their products; 
and a rise of price always diminishes the consump- 
tion of a product by putting it out of the reach of some 
of its consumers. The demand for this sort of pro- 
duct then diminishes, and its price falls. The price 
not then affording so liberal a remuneration for the 
productive services devoted to this object, the quantity 
of it is lessened. Thus when an import duty is laid 


on cotton, the manufacturers of cottons, and the trades- 


76 ON, PUBLIC PROPERTY 


men who sell them, cannot raise the price so high as 
to recover back the amount of the taxes; for that pur- 
pose it would be necessary, that the same quantity of 
cotton goods should be demanded and sold, and that 
the society should devote to the purchase of this par- 
ticular article more values than it had heretofore de- 
voted to it, which is not possible. The cotton goods 
become dearer; their producers gain less; and this 
kind of production declines. 
What consequence do you draw from this ? 

That the impost is paid partly by the producers, 
whose profits, i.e. whose incomes it lessens; and 
partly by those consumers who continue to purchase 
notwithstanding the dearness, since they pay more for 
a product, which, in point of fact, is not more valuable. 

What other consequence do you draw from it? : 

That the impost, in making the products dearer, 
does not augment even nominally the total value of 
productions; for the products diminish in quantity 
more than they augment in price. 

Does this effect take place with respect to any other 
merchandize than that on which the impost is levied ? 

It takes place on all the merchandize which the 
contributor sells. Brewers and bakers sell their pro- 
ducts dearer when a tax is laid on the wood or coals 
which they burn. A tax on meat and other eatables, 
at the gates of a city, renders all its. manufactured 


products dearer. 


AND TAXES. 77 


Can all producers make the consumers bear a portion 
of the imposts which they are compelled to pay ? 

There are producers who cannot. An impost laid on 
an article of luxury bears only on those who consume 
it. Ifa tax be laid on lace, the wine merchant whose 
wife wears lace, cannot sell his wine dearer on that 
account; for he could not maintain a competition with 
his neighbour whose wife does not wear lace. A land- 
holder cannot in general make his consumers bear any 
portion of the tax he is compelled to pay.* 

In order not to decewe ourselves as to the effect of 
taxes, how ought we to consider them ? 

As a cause of the destruction of part of the products 
of society. ‘This destruction takes place at the ex- 
pense of those who are unable to evade or shift it from 


themselves. ‘The producers and consumers pay the 


* So long as the tax does not absorb the whole of the net profit, or 
rent of land, it is worth while to cultivate it: consequently the impost 
does not diminish the quantity of the territorial products which come to 
market ; and this is never a cause of dearness. When the impost is ex- 
cessive, it surpasses the net produce of the worst lands, and hinders the 
improvement of others. Thus territorial products become more rare : 
still this circumstance doesnotraise the price in a durable manner; because 
the population is not long before it gets down to the level of the territo- 
rial products; if less are offered, less are wanted. For this reason, in 
those countries which produce little corn, it is not dearer than in those 
that produce much. It is even cheaper, for reasons which cannot be de- 


veloped here, 


718 ON PUBLIC PROPERTY 


value of the products thus destroyed ; the first, in not 
selling their products at a price sufficient to cover the 
taxes; the second, in paying more for them than they 
are worth, but in proportions which vary with every 
article and every class of individuals. 

_ We may also consider the impost as an augmenta- 
tion of the charges of production. It is an expense 
sustained by the producers and consumers; but which, 
while it renders the products dearer, does not augment 
the incomes of the producers, as its amount is not di- 
vided among them. ‘Their expenses augment as con- 
sumers without their incomes increasing as producers : 
they are not so rich. 

What is to be understood by a subject of taxation 2? - 

By those words, is often meant, the merchandize 
which serves as a basis for the tax. Brandy, in this 
sense, is a “ subject of taxation,”’ by means of the du- 
ties which are levied on this liquor. But the expres- 
sion is not correct. Brandy is only a basis for the de- 
mand of a value ; a merchandize which the government 
uses as a means of raising money. The true subject 
of taxation is, in this case, the income of the individuals 
who manufacture and consume the brandy. Thus the 
subject of taxation increases, when these incomes, 
whatever be their source, are augmented. 

IV hat do you conclude from that ? 


AND TAXES. 79 


That every thing which tends to increase the riches 
of a nation, extends and multiplies the subject of taxa- 
tion. It is from this cause, that as a country prospers, 
the amount of the taxes increases, without increasing 
the rate of them; and diminishes, when it declines. 

Are we justified in considering the amount of the 
taxes as part of the income of a nation ? 

Never, for they are values not created but transfer- 
red. They have formed a part of the incomes of indi- 
viduals, which they have not consumed. 

Has not the government other sources of revenue ? 

Sometimes the government retains the exclusive ex- 
ercise of a certain industry, and causes it to be paid 
for beyond its value ; as the carriage of letters. In this 
case, the tax does not amount to the whole of the 
charge for postage, but only to that part which ex- 
ceeds what it would cost if this service was left open 
to free competition. 

The profits which government sometimes makes on 
lotteries is of the same kind ; but is much less justifi- 


able on many accounts, 


80 


CHAPTER XV. 


On Public Loans. 


WITH what view do governments borrow money ? 

To provide for extraordinary expenses which the 
ordinary revenues are not sufficient to discharge. 

How do they pay the interest of the loans they con- 
tract ? 

They pay it either by laying on a new tax, or by 
economising, from the ordinary expenses, a sum suf- 
ficient to pay the annual interest. ae 

Loans, then, are a means of consuming a principal, of 
which the interest is paid by a portion of the taxes ? 

Yes. . 

Who are the lenders ? | 

Individuals who have capitals at their’ disposal. 

Since government represents the society, aud society 
is composed of individuals, it is then the society which 


lends to itsel, ? 


ON PUBLIC LOANS. 8h 


Yes: it is a part of the individuals who lend to the 
whole of the individuals; that is to say, to the society 
or to its government. mas 

What effect is produced by public loans on the public 
riches? Do they augment or diminish them? 

The loan in itself neither increases nor diminishes 
them: it is a value which passes from the hands of 
individuals to the hands of the government, a simple 
transfer. But as the principle of the loan, or, if you 
will, the capital lent, is generally consumed in conse- 
quence of this transfer, public loans produce an impro- 
ductive consumption, a destruction of capital. 

Would not a capital thus lent have been equally con- 
sumed if it had remained in the hands of individuals ? 

No: the individuals who lent the capital, wished to 
lay it out, not to consume it. If it had not been lent 
to government, it would have been lent to those who 
would have made use of it; or they would have em- 
ployed it themselves; thus the capital would have 
been consumed reproductively instead of improduc- 
tively. 

Is the total income of a nation increased or diminished 
by public loans ? 

It is diminished; because all the capital which is 
consumed, carries with it the income which it would 
otherwise have gained. 


But in this case, the individual who lends, does not 
Cdl) 


$2 ON PUBLIC LOANS. 


lose any income, since the government pays him interest 
for his capital; and if he does not lose, who does 2 - 

Those who lose are the contributors who pay the 
increased taxes, with which the public creditor is paid 
his interest. 

But if the creditor receives on the one hand an income 
which the contributor pays on the other, it appears to me 
that there is no portion of income lost, and that the state 
has profited by the principal of the loan which it has 
consumed. 

You are in an error; and to convince you of it, we 
will examine how this operation is effected. An in- 
dividual lends to the state a thousand pounds. Con- 
sequently, he draws this value from an employment in 
which it was already, or in which it would have been 
engaged. Supposing that this employment would 
have afforded five per cent. there is an income of fifty 
pounds taken from the society. It is nevertheless paid — 
to the creditor ; but how is it paid? “At the expense of 
a contributor; of a landed proprietor, who would have 
used for his own purpose these fifty pounds which the 
government takes from him to pay the creditor. In- 
stead of two incomes which there was in society, that 
of the thousand pounds lent to government (which 
either had been, or might have been, placed elsewhere) 
and the income of the funds, which had produced to 
the landholder the fifty pounds of contribution, which 


ON PUBLIC LOANS, 83 


he has been compelled to pay to satisfy the creditor. 
In lieu of these two incomes, there remains but one, 
namely, the last, which is transferred from the contri- 
butor to the creditor. | 

Why is there only one income of fifty pounds, where 
there had been formerly two ? 

Because there had been, beside the funds of the 
contributor, another fund of one thousand pounds, 
producing fifty pounds, which has been lent and con- 
‘sumed, and which, consequently, produces nothing.* 

What are the principal forms under which a govern- 
ment pays the interest of its loans 2 

Sometimes it pays a perpetual interest on the capi- 
tal lent, which it does not bind itself to repay: the 
lenders have in this case no other means of recover- 
ing their capital, than to sell their debt to other indi- 
viduals, who desire to place themselves in the situation 
of the former. 

‘Sometimes it borrows, by way of annuity, and pays 
the lender a life interest. 

Sometimes it borrows on condition of repayment, 
and it stipulates a pure and simple repayment, in a 
certain number of years, by instalments; or a reim- 
bursement of the principal sum at periods which are 


sometimes determined by lot. 


* See in my Treatise of Political Economy, 2d edit. book iit. c 9. a 
ry: Ys 


synoptical table of the progress of these values. 


84 ON PUBLIC LOANS. 


Sometimes it negociates bills on its agents, the 
receivers of contributions. ‘lhe loss which it suffers 
by discount feprescnits the interest on the advances it 
receives. 

Sometimes it sells public offices, and thus pays 
interest for the money furnished. The incumbent can 
never get back his principal without selling his office. 
The price of offices is often paid under the name of — 
security. | 

All these modes of borrowing Have the fees of 
withdrawing from productive employment capitals 
which are consumed in the public service. 

fas not the government the means of paying its 
debts, even those of which it has pronto to pay the 
mnterest perpetually ? 

Yes; by means of what is called a sinking fund ? 

What is a smking fund? 

When a tax is laid upon the people to pay the 
interest of a loan, it is laid a little heavier than is 
necessary to pay this interest; this excess is confided 
to what are called commissioners for the management 
of the sinking fund, and who employ it every year to 
buy up at the market price a part of the interest 
or annuities paid by the state. As the same interest 
always continues to be paid, the sinking fund devotes 
in the year following, to the purchase of these interests, 


not only the portion of the tax which is devoted to 


ON PUBLIC LOANS. 85 


this use in the first instance, but also the interest 
which it has already bought up. This manner of 
extinguishing the public debt by its progressively 
increasing action, would extinguish it with sufficient 
rapidity if these sinking funds were never diverted 
from this object, and if the debts were not kept up by 
a perpetual addition of new loans, which bring annual- 
ly into the market more interest than the sinking fund 


buys up. 


86. 


CHAPTER XVL 


a” - 


On Property, and the Nature of Riches. 


CAN riches exist where there is no property ? 
No: for riches being composed of the value of the 
things which we possess, there can be no riches where 
no things are possessed ; that is, no property. 

Into how many classes can things possessed be ar- 
ranged ? | 

Into two grand classes : that which constitutes stock, 
and that which constitutes income. 

What do you observe relative to the riches which con- 
stitute income ? 

That having been created without affecting our 
stock, they may be consumed without encroaching 
upon it; and that if we do not consume them impro- 
ductively, they will increase our stock. 


Do younot sub-divide that which constitutes our stock? 


ON PROPERTY AND RICHES. 87 


Yes : our stock may consist, 
Ist. Of land and other natural agents, of which we 
are acknowledged proprietors ; . 
2nd. Of capital, or values produced, which we de- 
yote to reproduction ; 
Srd. Of faculties, or talents, natural and acquired, 
which we employ for the same purpose. 
What do you observe relatively to the riches which 
constitute our stock 2 
That we can alienate the property of the first two 
kinds of stock (our lands and our capitals) but not that 
of the third kind (our industrious talents). That we 
can let out to use all the three kinds. That the last 
is a life property, which perishes with us. 
What have you Jurther to observe respecting them? 
That not being applicable to the satisfying of our 
wants, or of procuring enjoyments, because they are 
appropriated to reproduction, they are of no value, ex- ° 
cept for the faculty which they have of contributing to 
the production of some other consumable values. The 
demand which there exists for consumable values, that 
is, for products, establishes a demand for the stock 
which is capable of producing, that is, for land, capi- 
tal, and industrious talents ; this demand establishes 
their value: and this value makes a part of the riches 
of those to whom they belong. 
Why have not g great number of natural agents ne- 


38 ON PROPERTY AND RICHES. 


cessary to production, as the heat of the sun, the air of 
the atmosphere ; why have not these a value ? | 

Because there is no demand for their productive . 
faculties; and there is no demand for them, because 
when these faculties are present they exceed all wants, 
and are accessible to all mankind: and when they are 
not present, no person can provide them, because nog 
one can appropriate them. | \ 

What results from this fact in relation to the value 
of products ? 

That when nature lends, gratuitously, her powers 
to the creation of products, the charges are less than 
when we must pay for assistance ; and that we obtain 
consequently, products at a cheaper rate. It is for 
that reason that the grapes of the south do not cost 
so much as those of the north, which are raised in hot- 
houses. 

You have said that riches are proportioned to the value 
of the things we possess, that is, that they are so much 
the greater as the values we possess are greater ; have 
you any thing to add to this subject? 

Riches are proportioned to the values we possess, 
-or rather are only those values themselves: but these 
values are great or small in comparison with the price 
of the things which may be obtained for them. In 
other words, if with a certain sum in land, in capital, 


and in income, I can obtain the things I am in want 


ON PROPERTY AND RICHES. 89 


of at half the price I have hitherto obtained them, by 
that alone, my riches are doubled. 

Thus a nation that does not possess in nominal 
value more than one half what another nation possesses, 

~willnevertheless be as rich, ifshe can procure all the 
products of which she is in want, at half the price the 
other nation is obliged to pay. 

- The very height of riches, however few values one 
might possess, would be to be able to procure for 
nothing’all the objects we wished to consume. 

We should be at the lowest ebb of poverty, however 
immense might be the values we possessed, if the value 
of the things we wanted to consume exceeded the price 
which we were able to pay for them. 

In what does the dearness and cheapness of things 
consist ? 

We will examine that in the next chapter. 


( 12 ) 


90 


CHAPTER XVIL 
On the Real and Nominal Puccs " tse 


GIVE me some just ideas on the price of things. 

If you wish to form just ideas on this subject, you 
must never confound the nominal price with the real 
price of things. 

What do *you call the nominal price of things ? 

The price we pay for a thing in money or in coin. 

What do you call its real price? 

The value we have given to obtain the money with 
which we purchase this thing. 

Give me an example. 

A potter is in want of a loaf of bread, which sells 
for a shilling: he is obliged, in order to obtain it, to 
sell a vase which is worth a shillng. If the price of 
the loaf should rise to two shillings; and if the potter 
be obliged to sell two vases in order to obtain these 
two shillings, which he must pay for the loaf, the 
dearness of the bread is rea/. If the potter can obtain 


ON THE REAL AND NOMINAL PRICE. 91 


- these two shillings by the sale of a single vase, the 
: dearness of the bread is only nominal. He has in both 
cases exchanged only one vase against one loaf, what- 
ever may have been the denomination of the interme- 
diate value. It is the value of the money which is de- 
preciated: that of the bread has remained the same. 
_ Is it not a real dearness to aman whose income arises 
from lands which are let, or from a capital lent at in- 
terest, when the loaf has risen from one to two shillings? 
No: that which is real is the depreciation which 
has taken place in the value of the merchandise in 
which his income is stipulated to be paid: that is, in 
the fall of the money. He who pays the income, by 
acquiring this merchandise at less expense, gains in 
this case what the other loses. 

You have said that if, when I ain obliged to give two 
shillings to buy a loaf, I be able to obtain these two shul- 
lings, on the same terms that I before obtained one, the 
loaf has not become dearer ; but if to obtain two shil- 
lings; that is, the price of one loaf, I be obliged to give 
two vases instead of one, then the bread will have really 
become dearer ? 

No; not if the vases, as well as the money, have 
fallen to half their value. 

How can I tell whether they have fallen to half their 
value or not ? 

They have fallen, if they can be obtained for half the 


expenses of production: that is, if means have been 


92 ON THE REAL AND 


found to create, at the same charge of production 
(which consists, as we know, of the workmanship, 
interest of capital, and profit) two vases instead of one. 

It is then the lowering the charges of production 
which causes the real fall in the price of products? 

Just so. Then whatever may be the value with 
which a product is purchased, this product, which has 
fallen one half, is obtained for one half less expense 
of production. | 

Explain this by an example. 

If, by means of a knitting frame, I can make a pair 
of stockings for three shillings, instead of expending 
six shillings on them, he who raises wheat, can obtain 
a pair of stockings for one half the quantity of wheat 
which he had before been accustomed to give for 
them. That %s, if he were before obliged to sell thirty- 
six pounds of wheat in order to obtain a pair of stock- 
ings, he would now sell but eighteen. But the eighteen 
pounds have required on his part only one half the 
expenses of production which the thirty-six pounds 
would have required. 

It is the same whatever is the production with which 
we are occupied. It may be said, that when an arti- 
cle really falls in price, not only those who produce it, 
but every body else, obtains it at the price of the re- 
duced charge of production. 

You have said, besides, that the riches of society are 


composedof the sum total of the values which it possesses: 


NOMINAL PRICE. gs 


it appears tome to follow, that the fallofa product, stock- 
ings, for example, by diminishing the sum of the values 
belonging to society, diminishes the mass of its riches. 
The sum of the riches of society does not fall on that 
account. ‘Two pairs of stockings are produced instead 
of one; and two pairs, at three shillings, are worth as 
much as one pair at six shillings. The income of so- 
ciety remains the same; for the maker gains as much 
on two pairs, at three shillings, as he did on one pair 
at six shillings. 
But, when the income remains the same, and the 
« products fall, the society is really enriched. If the 
same fall takegyplace on all products at once, which is 
not absolutely impossible, society by obtaining all the 
objects of its consumption at half price, without having 
lost any part of its income, would really be twice as 
rich as before, and could buy twice as many things. 
This does not generally happen: but it has happened 
to a great number of products, which have fallen from 
the price they were formerly at, some a tenth, some a 
fourth, a half, three-fourths, as silver; and even ina 
greater proportion, as silks, and probably many other 
articles. 
To what cause is this to be attributed 2 
To many causes ; but principally to the progress of 
~ intelligence and industry. It is to their progress that we 
owe, both the discovery of countries in which there is a 


ereater abundance of products, and also a means of 


e- 


94 : ON THE REAL AND 


transporting them less hazardous and more-economi- 
cal. ‘To that progress also we are indebted for pro- 
cesses more simple and more expeditious, the use of 
machinery, and in general a better adaptation of the 
productive faculties of nature. 

Are there any products which have really become 
dearer ? 

There are some; but very few; and only those the 
demand for which has increased in consequence of the 
progress of civilization, without the means of produe- 
tion having increased in the same proportion; such 
as butcher’s meat and poultry, and almost all the use- 
ful animals which are raised at lessygxpense in less 
civilized countries. 

Are there not variations in the value, which are not 
the consequence of the charges of production ? 

The errors, the fears, or the passions of men, or 
unforeseen events, cause disorder and confusion in 
values which are merely relative: that is, when any 
merchandise rises or falls with respect to others, im 
consequence of circumstances foreign to its produc- 
tion. Late frosts increase the price of the last year’s 
wines, whatever may have been the charges of their 
production. 

Does such a dearness increase the national wealth ? 

No: for in exchanging another product for one 
which has become dearer, one must sive more, to re- 
ceive fess: he who buys,—loses on his merchandise, 


precisely as much as the seller gains on his goods. 


NOMINAL PRICE. 95 


When the wine doubles its price, he, who, to pur- 


” chase a cask of wine is obliged to sell six bushels of 


wheat instead of three, which should have purchased 
a cask of wine, is poorer by all that the wine merchant 
is richer. 

Thus these kinds of variation, which sometimes 
overturn private fortunes, do not affect the general 
riches. — 


* The changes in values which take from a man that property which 
he did not deserve to lose, to give it to another, who did not deserve to 
gain it, are nevertheless mischievous to the general prosperity. They 
inflict more evil on him who loses, than they confer benefit on him who 
gains : they disapyi@int the wisest calculations : they discourage the most 
useful speculations : they. divert capitals which were in full productive 
activity, &c. &c, 


96 


CHAPTER XVII 


On Money. 


IF money be nothing but merchandisg, why is coined 
silver of greater value than the same weight of silver 
uncoined ? 

For the same reasons that a silver tea-pot is worth 
more than the same weight of silver in an ingot. 

The fashion that the mint-master gives to the silver, 
is then of the same kind as that given by the silver- 
smith? 

Precisely of the same kind. 

W hat utility does the fashion of the mint-master give 
to the silver ? | 

The impression on the money announces the weight 
and quality of the coin; that is, the quantity of fine 
metal and of alloy therein; consequently, it saves 
those who receive it the expense of weighing and as- 
saying it. 


ON MONEY. 97 


Why do. governments reserve to themselves the ex- 
. elusive right of coining money ? 

In order to prevent the abuses which individuals 
might create in this manufacture, by not making it of 
the same fineness and weight which the impression 
indicates. And sometimes they reserve that right, in 
order to obtain the profit of it, which makes part of 
their revenue. 

Cannot the government, by virtue of this exclusive 
privilege of coining money, raise the value of money 
much beyond the expenses of manufacturing this mer- 
chandise ? 

It can do sp, by reducing greatly the quantity of 
pieces coined, or the amount of the money. 

IV hat would happen then ? 

‘The money-merchandise becoming more scarce in 
proportion to the quantity of other merchandise in 
circulation, that is, which we are disposed to sell or 
to buy; this money-merchandise would be more in 
demand relatively to allother merchandise. We should 
give less money in exchange for more of other goods ; 
in other words, goods would fall in price. 

Should we not feel in commerce some inconvenience 
arising from the scarcity of money ? 

If that effect took place, the inconvenience would 
not be lasting; because the total real value of the 
money would not be diminished by it. There would 

(13 ) 


98 ON MONEY. 


be fewer pieces; but each of the pieces would be 
worth more; or, in other words, other goods would 
nominally fall in price, and their sum total would still 
_bear exactly the same proportion with the sum total 
of the money. , 
W hat inconvenience would be felt in this case? 
‘The ingots and utensils of gold and silver, being a 
different kind of merchandise from money, although 
made of the same material, would fall in price like all 
other merchandise. This would make a great dispro- 
portion between these metals in money and in ingots. 
There would be a considerable gain in converting 
them into money, which is an inducement to counter- 
feit and fabricate false money. 

You have just shewn in what case money-merchan- 
dise rises in value with respect to other merchandise ; 
in what case does it fall with respect to such merchan- 
dise ? 

When the quantity of the money is augmented re- 
latively to all other merchandise, then more money ‘is 
offered for /ess merchandise: the money would fall; 
in other words, the other merchandise would become 

nominally dearer. 

You say nominally; but is it not really, when it is 
not the name of the money which is changed, and we 
actually give a greater weight of metal ? 


The value of the metal is, in this case, really less ; 


~ 


ON MONEY. ' 99 


but the value of the other merchandise, not having 
really changed, the variation of their price is only no- 
minal. With the same quantity of corn, we purchase 
the same quantity of stuff. A bushel of corn, instead 
of being worth six shillings, is worth twelve; but a 
yard of cotton, instead of costing two shillings, costs 
four: thus, to buy three yards of stuff, we are still 
obliged to sell a bushel of corn as before ; and a bushel 
of corn, though worth double the quantity of money, 
is still only equal to the value of the same quantity of 
stuff. 3 

This is what happened when the discovery of the 
mines of South America threw into circulation an 
immense quantity of gold and silver, in comparison to 
what there had been before. To obtain the same 
quantity of corn, we must now give nearly three times 
as much silver as before the discovery of these 
mines. 

America has then thrown into circulation three times 
as much silver as there was before ? 

She has circulated much more. But commerce, 
population, and riches, having greatly augmented 
since this discovery, the necessity for gold and silver, 
as well for tlre purposes of money as for furniture and 
omaments, has greatly augmented also ; and has pre- 
vented the precious metals from suffering a deprecia- 
tion in proportion to their abundance. ‘They have 


100 ON MONEY. 


‘ “been produced in ten times the quantity ; but have 
been three times more in demand. 

What happens when, under the same denomination 
of money, a guinea, for example, the government gives 
less metal than it gave before? 

The value of the money, which had fallen really 
with respect to other merchandise, then falls nomz- 


ral Mec, an vangogh 
Lxplaut this ey a example. 


When the piece, called sta lwres tournois, does 
not contain more silver than that which was before 
called three livres tournois, we do not obtain for six 
livres mere merchandise than we before obtained for 
three livres; that is, the same quantity of merchandise 
costs the same weight of silver. The value of the 
ingot of silver has scarcely varied from the year 1636 
to the present time: with an ounce of silver we can 
buy the same quantity of those goods, whose value 
appears to have undergone the least variation. ‘The 
setier of corn sold commonly for twelve livres tour- 
nois: and the same setier sold in 1789 for twenty-four 
livres; but twenty-four livres in 1789, did not contain 


a greater weight of silver, than in 1636 there-was in 


| twelve livres.* Lot Ca nes 


* The marc of silver, of the standard of the mint (of Paris), was worth 


about twenty-five livres in 1636; in 1789, fifty livres tournois. In England, 


ON MONEY. {OL 


W hat effect does ts produce on the interests of in- 
dividuals? — ; 

With respect to debts contracted previously by the 
government, if it pay them in money which is really 
worth less, it becomes bankrupt by all that there is 
less in the value of the new, than there had been in 
the old money. 

And when it authorizes individuals to discharge 
their former debts in the new money, it authorizes 
them to commit a bankruptcy similar to its own. 

With regard to the bargains made by individuals 
after the change in the money, this change produces 
no inconvenience. ‘The bargains are made according 
to the real value of the new money. 

Does a nation, whose money is carried into other 
countries, lose in consequence of this operation? 

No: for the individuals who send it, take care to 
obtain at least an equal value in return. 

Does the nation gain by such an exportation ? 

Yes: when she takes care not to coin money gra- 


* 

where no alteration had been made in the weight or fineness of the money, 
scarcely any variation took place in the price of corn: the average of 
seven years previous to 1636, was about 6s. 1 3-4d; and for seven years 


previous to 1790, was 5s. 10 3-4d. per bushel.—7'r. 


102 ON MONEY. 


tuitously, and never to manufacture this kind of mer- 
chandise, unless she is sufficiently indemnified for the 
employment of her capital, and the wages of her in- 
dustry. ies TN 

What relation is there between the value of sold and 
silver ? 

Their relative values vary continually, and in dif- 
ferent places, ‘like the relative values of any other 
merchandise whatever. The value of the gold is 
raised in regard to that of silver, if gold be more de- 
manded or less offered; hence the agio we are obliged 
sometimes to pay for the purchase of gold coin with 
silver money. 

Does the same variation exist between copper and 
silver monies ? 

Not commonly; because we do not receive copper 
money pure, nor that of copper mixt with silver, which 
is called dillon, at the rate of its intrinsic value, but 
in consequence of the facility which it affords for ob- 
taining a piece of silver. If a hundred sous, which 
are paid me in copper, be intrinsically worth no more 
than four frances, what does it signify to me, that I re- 
ceive them for five francs, because I am sure to get 
for them, whenever I please, a piece of five francs? 
But when copper money becomes too abundant, 


and we can no longer obtain for it at pleasure the 


ON MONEY. 103 


quantity of silver that it represents, its value is alter- 
ed, and it can be no longer disposed of without loss. 

Repeat to me summarily the essential principles which 
relate to money. 

The numerous exchanges, and other transactions 
which cannot be dispensed with in a populous and ci- 
vilized society, render absolutely necessary the use of 
an intermediate theychandise, which is money. 

This nierchandise is commonly of silver, manufac- 
tured for that pupose. 

The value of this merchandise is establised, like all 
other metals, in direct proportion to the demand for it, 

or to the necessity we have for it; and in inverse pro- 
portion to the quantity offered, or to the quantity which 
is actually in circulation. 
~The metal coined into money is a merchandise, 
totally different from the metal fashioned into any 
other thing. An ounce of metal in money may equal 
in value two ounces of metal in an ingot; because 
«it is not in the power of every body to convert the 
{ingot into money : but an ounce of metal in an ingot 
éannot be worth much more than an ounce of metal 
in money, because any body can convert the money 
Canto an ingot. 

Whatever be the name given to any piece of mo- 

ney, whether it is called three livres or six livres, it 


is not really worth, as it regards other merchandise, 


104 ON MONEY. 


more than the value of the metal and the fashion ; but 
this fashion may be paid for too dearly, as it is ex- 
clusive, and as government keeps to itself the right of 


coining money.* 


* It was not possible, in anelementary work like this, to include any 


but the most important principles, and which were essential to the inte- 


rest of the public. The subject is treated ‘bh in the Treatise on 


Political Economy. 


. ° * 


105 


CHAPTER XIX. 


On Signs representing Money. 


WHY do you not call money a sign representative of 
merchandises ? 
‘ “Because it is no more a sien representative of mer- 
.chandise, than any one merchandise is the sign of an- 
e other. _ A cloth merchant might as well say, that the 
cloth in his Warehouse is the sign which represents 
bread and meat ; because, after an exchange or two, 
he might get bread and meat for his cloth. 
What do you call signs representative of money 2 
‘Titles, documents, or vouchers, which have no in- 
trinsic value, but which acquire one by the right 
which they give to a certain quantity of money ; such 
as bills of exchangé, bonds, bank notes, &c. 
W hat do you observe, respecting bills of eacchange ? 
1. That they do not give the right to receive a sum 
of money till the end of a certain term, which dimi- 
nishes their value by all the amount of the interest 
(14) 


106 ON SIGNS REPRESENTING MONEY. 


and of the risk which the bearer runs, of not being 
paid when they become due. On this account, they 
cannot be generally sold for the full amount that they 
give the right to receive. Commonly the discount on 
them is lost. | 

2. That they are sometimes payable abroad, and 
consequently in foreign money. In order ‘oe them, 
this foreign money must be valued i in the national mo- 
ney : it is this valuation which is called the course of 
exchange. The exchange is at par, when the quantity 
of fine gold or silver, paid for the purchase of a foreign 
‘bill of exchange, is precisely equal to the quantity of 
these metals, which the bill of ee gives the 
right of receiving abroad. . 

W hat do you observe respecting hanle notes : 2 

That they circulate among the public for the entire * 
value which they represent, when we are certain, by 
means of the note, to receive that value whenever we * 
think proper. ! 

W hat assurance has the public that the notes of a bank 
will be punctually paid? 

A well-administered bank never issues a note with- 
out receiving for it a value in exchange. ‘This value 
is commonly money, or ingots, or bills of exchange. 
That part of the deposit, which is in money, is at all 
times ready to discharge them. That part which is in 
ingots, requires only the time necessary to sell them. 
‘That part which is in bills of exchange, only requires 


ON SIGNS REPRESENTING MONEY, 107 


one to wait, at the worst, till they become due, before 
their value can be used to discharge the notes. So 
that, if the bills of exchange bear the names of many 
solvent persons, and if the times of payment are not 
at too great a distance, the bearers of the notes run no 
other risk than a trifling delay. 

But if these bills of exchange be paid when due, “a 
notes of the bank instead of money .... » 

Then those notes are in fact discharged. 

Bank netes can then supply the place of money ? 
‘4, Yes, toa certain point; but only in places where 
an office is constantly open to exchange them for mo- 
wey; for they are no longer worth the full sum of 
) money, the instant they cease to be exchangeable for 
money at pleasure. 

What is  peyffer money ? ‘ 

It is a title which gives no right to any real reim- 
bursement, but to which public authority attributes a 
certain value: a title which is received at that value 
in the payments which are made to the government, 
and which it authorizes individuals to give in pay- 
ment for the discharge of engagements which they 
have contracted with each other. 

What is it that keeps up the value of paper money ? 

Sometimes rigorous measures taken against those 
who refuse to sell for paper money; sometimes the 
uses to which the government admits it, such as the 
‘payment of taxes, and of debts previously contracted, 


108 ON SIGNS REPRESENTING MONEY... 


sometimes, and almost always, it is the absence of all 
other money-merchandise; so that the public, which 
has nothing else to substitute for the ordinary use of 
money, is obliged to apply to it from the absolute 
necessity there is for this kind of merchandise. Often 
it is all these things united which give any value to 
paper money. These means would ever give ita very 
considerable value, if the facility which there is of 
multiplying it at will, did not always, sooner or later, 
bring it into disrepute. . 

One cannot then, by multiplying paper money, mul- 
tiply at will the riches of a country 2. 

No. , 

Explain to me why. 

Because the paper money can only replace a part of 
the riches of a country, that part tvlaicle consists of 
eoin; and the money itself, were it even gold or silver, 
forms but a small part of the riches of any country 
when compared with the value of all the things in it ; 
land, houses, furniture, buildings of every kind, mer- 
chandise, and even industrious talents. 

« You say, were it even gold or silver. Zt appears to 
me, that in augmenting the mass of money of gold or 
silver, the real riches of a country are increased. 

The quantity of sales and purchases ina country, 
require a certain monetary value devoted to that circu- 
lation. When the quantity of money is increased, 


without being necessary for the circulation of a coun-’ 


ON SIGNS REPRESENTING MONEY. 109 


try, the real value of the money declines, whatever 
“ may be its nominal value: and losing in value as much 
as it increases in quantity, the total riches are no 
greater. f If the quantity of silver money were to be 
doubled, we should be obliged to pay two ounces of 
silver for what we before bought for one; consequent- 
ly, two millions of nominal money in silyer would not 
be of more value than one million was formerly. 
Itis the same with paper money. If the quantity of 
this money had been increased tenfold, we could not 
Vobtain ‘with ten notes of an hundred pounds more 
ethan had been before obtained with one note. What- 
eyer name is given to this sum, it can never have in 
the whole more than a certain value; and this value, 
truly effective, whatever may be the material of which 
the money i#madé, is always determined by the wants 
of the circulation, and the state of civilization, of 


riches, and of industry, in a country. 


110 


CHAPTER XxX. 


On Markets. 


WHAT do you mean by markets ? 

Before answering this question, I beg you to re@ 
mark, that those who engage in production, are seldom 
occupied with more than one product, or at most a 
small number of products. A tanner generally pro- 
duces nothing but leather; a clothier, cloth; one 
merchant deals in wine ; another imports foreign goods ; 
one cultivator raises the vine; another corn; a third, 
cattle. 

What consequences do you draw from that ? 

That none of them can enjoy the greatest part of 
the various articles for which he has occasion, except 
by means of exchanging the greater part of his own 
productions for those which he desires to consume: 
so that the greater part of the consumptions of society 
take place only in consequence of an exchange. 

But when we are able easily to exchange our own 


ON MARKETS, lll 


productions for those which we want, we are said to 
have found ready markets for our products. 
On what does the ready sale of any particular article 
depend? | 
On the vivacity of the demand for it. 
On what does the vivacity of the demand depend 2 
On two motives, which are—Ist. The utility of the 
product, that is, the necessity the consumer has for 
it:—2d. The quantity of other products he is able to 
give in exchange. 
I concewe the first motive. As to the second, it ap- 
pears to me that it is the quantity of money that the 
ebuyer possesses, which induces him to buy or not. 
‘That is also true: but the quantity of money which 
he has, depends on the quantity of product with which 
“ he has been able able to buy this money. 
Could he not obtain the money otherwise, than by hav- 
ing acquired it by products 2 
No. | 
Tf he had recewed the money from his tenants . « . 2 
His tenants had received it frem the sale of part of 
the products to which the earth had contributed. 
If he had recewved the interest of a capital lent——? 





The undertaker who employed that capital had re- 
/ceived the money which he paid, on the sale of a 
part of the products to which his capital had con- 


curred, 


112 ON MARKETS, 


Lf the purchaser had obtained this money by gift or 


inheritance 2 





The giver, or he from whom the giver had obtained 
it, had it in exchange for some product. 

In every case, the money, with which any product 
is purchased, must have been produced by the sale of 
another product; ‘and the purchase may be considered 
as an exchange in which the purchaser gives that which 
he_has, produced, (or that which another has  pro- 
duced for him,) and in which he receives the thing — 
bought. 

WV hat do you conelude from this ? 

That the more the purchasers produce, the more « 
they have to purchase with; and that the productions 
of the one procure purchasers to the other. 

ft bppears to me, that if the buyers only purchased 
by means of their products, they have generally more 
products than money to offer in pa ymgent 

- Every producer asks for money in exchange for his 
products, only for the purpose of employing that mo- 
ney again immediately in the purchase of other pro- 
ducts; for we do not consume money : and it is not‘ 
sought after in ordinary cases to. conceal it: thus, when 
a producer desires to exchange his product for money, 
he may be considered as already asking for the mer- 
chandise which he’ proposes to buy with this money. 
It is thus that the producers, though they have all of 


them the air of demanding money for their goods, do 


ON MARKETS. 118 


in reality demand merchandise for their merchan- 
dise. 
Then the more merchandise there is produced, the 
more animated is the demand for merchandise ? 
Without doubt. It is for this reason, that countries, 
which are but little civilized, present few markets, 
and those for products but little varied; while in popu- 
, lous, industrious, and productive districts, the sales 
are repeated and considerable. 

It is not necessary then, in order that markets should 
be extended and multiplied, to look for them in foreign 
countries 2 

+ No; itis sufficient that other products should be 
multiplied in our own country. 

W hat is it that multiplies foreign markets ? 

The riches of neighbouring nations, and the activi- 
ty of their production. 

What consequence do you draw from this ? 

That each of them is interested in the prosperity of 
his neighbour, and every nation in the prosperity of 
all others: for it is only those who produce much that 

é ean readily give you any thing in exchange for your 
products: or, which comes to the same thing, that can 
“give you the value of them m money. 
W hat other consequence follows from this ? 
That riches are not exclusive ; that, so far from 
that which another man, or another people gains, being 


a loss to you, their gains are favourable to you; that 
(15) . 


114 \ ON MARKETS. 


it is only necessary for you to produce, not that which 
they produce easier than you, but that which they 
cannot fail to demand from you by means of: their 
products ; and that wars entered into for commerce, 
will appear so much the more senseless as we become 
better informed. 


115 


CHAPTER XxXI. 


On Regulations or Restraints of Industry. 


W HAT regulations are commonly made relating to 
industry ? 

The laws and regulations made by governments on 
this subject, have for their object either to determine 
on what products we may or may not employ our- 
selves; or to prescribe the manner in which the ope- 
rations of industry shall be carried on. 

What cxamples are there of the manner in which @ 
government determines the nature of the products in 
which we may engage ? 

In agriculture, when it prohibits a particular cul- 
ture, as tobacco; or when it gives extraordinary en- 
couragement to our crops, such as corn. 

-In manufactures, when it favours certain manufac- 
tures, such as silks ; and prohibits or restrains others, 


such as cottons. P 


ee a ON RESTRAINTS 


In commerce, when it favours by treaties, commu- 
nications with certain countries, and interdicts it with 
others; or when it gives privileges to trade in certain 
articles, and prohibits it in others. 

W hat is the effect of such regulations? 

To direct the efforts of industry towards produc- 
tions less suitable to the wants of the nation, and less 
lucrative to their producers. 

On what evidence do you suppose that the favoured 
productions are less suitable to the wants of the nation, 
and less lucrative ? ; 

By this alone, that these productions are not sufhi- 
ciently paid for to be able to support themselves with- 
out such encouragement. 

Ln what way do governments interfere in the manner 
in which products ought to be created 2 

In manufactures, public authority sometimes pre- 
scribes the number of those who are to be employed 
in them, and the conditions they must comply with, as 
when it establishes corporations, freedoms, and com- 
panies : or when it fixes the material which must be 
employed, the number of threads which the warp and 
welt of a stuff must contain, and subjects them to par- 
ticular marks. In commerce, it sometimes prescribes 
the route by which the merchandise must pass, the 
port at which it must be landed, &c. 

What is the object of corporations and freedoms ? 


OF INDUSTRY. 117 


It is to prevent incapable or inexpert workmen from 
deceiving the consumers by delivering to them an ar- 
ticle of inferior quality to that which it represents. 

Inwhat cases are the precautions taken by government 
to prevent such abuses, really useful ? | 

When the verification is impossible, or at least very 
dificult to the purchasers ; as in the case of apothe- 
caries’ drugs. The care which a government takes to 
ascertain the capacity and honesty of apothecaries, and 
even of physicians, is then incontestibly useful. The 
same may be said of that control by which it puts a 
stamp on all articles of gold or silver. 

What is the inconvenience of corporations and free- 
doms ? 

The establishment, in favour of producers united in 
corporations, of a monopoly, that is, the exclusive 
trade in what they produce; a monopoly of which the 
workmen on the one hand, and the consumers on the 
other, are the victims. . 

Why the workmen ? 

Because the corporation, in limiting the number of 
undertakers, and in subjecting them to certain forma- 
lities, limits the free competition of those who might 
employ the workmen. 

But tf the workmen on their parts agree together to 
demand certain wages ? 


It is then the workmen who form an unauthorized 


118 ON RESTRAINTS 


corporation, just as prejudicial as those which are au- 
thorised. ) 

How do corporations establish a monopoly against the 
consumers ? 

The production not being open to the competition 
of all producers without distinction, the products are 
not permitted to fall to the rate at which they might 
have been afforded by the charges of production ; in 
which are comprised, as we know, the profits of the 
different producers. 

What inconvenience arises from the profits being 
raised beyond what they would have been, if left to free 
competition? These profits forming part of the income 
of the nation, is not the income augmented | by this mo- 
nopoly 2 , 

That which the producers gain beyond the rate of 
free competition, is an excess of price lost by the con- 
sumer, at the same time that it is gained by the pro- 
ducer. It isnot a value created, but displaced. It is 
a portion of riches which goes out of one purse into 
another ; and which diminishes the general riches on 
the one hand, as much as it increases them on the 
other. 

But this loss is trivial to the consumer, while it is of 
unportance to the producer. 

It is little on each individual purchase. But when 


repeated on all the articles we purchase, it becomes 


OF INDUSTRY. 119 


considerable at the end of the year. And the ex- 
penses of individuals being thus greater in proportion 
to their incomes, it is the same as if their incomes 
were less with respect to their consumption. They 


are poorer. 


CHAPTER XXIL 


‘ 


On Importations, Duties, and Prohibitions. 


© 


WHAT does the word importation signify ? 

The purchasing abroad and introducing into a coun- 
try foreign merchandise. 

W hat do you mean by prohibitions ¢ 

Forbidding certain merchandise to be introduced 
into a country. Sometimes without prohibiting them 
entirely, they are made to pay duties on importation, 
which diminish the quantity imported. 

What results from an absolute prohibition ? 

An absolute prohibition forces the capital and in- 
dustry which would have been devoted to this kind of 
commercial production, to apply itself to some pro- 
duction less advantageous. 

Why less advantageous ? 

Because we should not engage in it but for the im- 


possibility of directing our industry in the other mode. . 


ON IMPORTATIONS, DUTIES, &c. 12} 


The prohibition would be superfluous, if the prohibit- 
ed production* were not the most advantageous. 

What happens, when, instead of an absolute prohiti- 
tion, a duty is only lad on the product imported ? 

The evil is then only partial, and consists in a dear- 
ness equal to the amount of the duty. The consumer 
pays for the product more than it is worth. 

What does it signify if the consumer pay dearer for 
any thing, since the producer gains by it ? 

The producer does not profit by ; for what it sells 
for more, goes in charges of production which are lost 
to every body ; or in contributions consumed for the 
service of the state. 

Why do you say that the charges of production are 
lost to every body? It appears to me, that such of these 
charges as are composed of the profits paid to producers, 
are not charges lost, since the producers profit by 
them. 

The producers are people who sell the service of 


their land, their capital and their industrious talents, 


* It must not be forgotten, that, by the word production, we under- 
stand the action of commercial as well as of all other industry. Rice is, to 
France or England, a product of commercial industry as much as wheat 


is a product of its agricultural industry. 


{ 16 ) 


122 ON IMPORTATIONS, DUTIES, 


whose gains are not the greater when all these services 
afford a product less abundant but dearer, 

When any regulations render it necessary, in order 
to create a pound of sugar, to employ more of the ser- 
vices of the land, capital, and industry, the sugar is 
dearer without the producers being greater gainers. 
If they receive more values in payment, they have also 
furnished more values in services. 

Do not the prohibitions and the duties, by compelling 
the creation of a product in the interior of a country, 
create the profits which are made in such a produc- 
tion ? 

They only cause the profits which would have been 
made on a commercial production, to be replaced by 
other profits, probably less lucrative, made on a manu- 
factured production. 

Ls not that a good? Are not our capitals better employ- 
ed in putting into activity our own national industry than 
that of foreigners 2 

Yes: but when we make the consumers, that is, the 
nation, pay dearer for certain products, simply to sup- 
port a greater number of national producers, it is just 
as if a part of the nation were compelled to devote a 
portion of its income to maintain workshops of charity. 
Perhaps no population is truly desirable but that, which 
industry, left to itself, can naturally support. 


You have just considered the import duties in their in- 


AND PROHIBITIONS. 123 


, 


fluence on the income, on the riches of a nation : and 
you have proved, that without augmenting the income of 
anation, they cause it to pay dearer for the objects it 
consumes ; whichis equivalent to areal deminution of its 
income. But if the state be in want of these duties for 
the public expenses, are they more mischievous than any 
other kind of umpost ? 

No; they are an impost on commercial production 
which procures us products from without ; as the land 
tax is an impost on the products which come to us 
from the earth; as the personal contributions and 
licences are imposts on the interior manufactures. The 
effect of all these imposts is to increase the price of all 
products without augmenting the income of those who 
consume them. ‘They are all useful in providing for 
the public expenses, from which the nation derives ad- 
vantage.’ But they never encourage production, nor 
augment the income of a country. 

However favourable the suppression of the taxes 
which bear on industry and consumers might be, would 
it not be attended with some danger ? 

Yes, when the suppression is sudden. The laws, 
and, in general, the whole legislation of a country, have 
long since induced the particular employment of cer- 
tain capitals in the productions in which they are actu- : 
ally engaged, and from which they cannot be with- 
drawn without lofing a great part, and sometimes 


124 ON IMPORTATIONS, DUTIES, 


nearly the whole, of their value. For example, if on 
the faith of security from laws which had for a long 
time prohibited cotton goods, the manufacturers had 
laid out large sums in machinery fit for the manufac- 
ture of cotton goods only ; and if by a new law, foreign 
cottons might all at once be introduced at a cheaper 
rate ; this law, though in fact favourable to the income 
of a country, since it is enabled to procure the same 
products at less expense, would be unfavourable to 
capitals; because it would reduce the value of the ca- 
pitals actually engaged in the production of cotton 
xoods. 

Besides, a part of the capital engaged in any kind of 
production is composed of the talents of the persons 
employed in this production ; for the advances which 
apprenticeships require are.a capital: and this capital 
is lost from the moment that the apprenticeship be- 
comes useless, A new apprenticeship is necessary ; 
that is, a new capital must be laid out. The loss of 
this kind of capital is the more painful ; as it falls on 
the working class, who, in general, are little able to 
bear it, 

And eyen in those cases in which a change in the 
legislation does not cause a total loss of capital, it 
always produces some evil, A building, by its ar- 
rangement and its situation, is convenient for a certain 


Kind of industry. It loses part of Its advantages, if its 


ON PRODUCTIONS. 125 


destination must be changed. The simple change of 
the habitudes, the dependencies, and the connexions 
of producers, exposes them to serious losses. It is only 
with great circumspection, that even the most desirable 
ameliorations ought to be introduced; otherwise we 
are in danger of overturning many fortunes, and de- 


stroying the happiness of many families. 


126 


CHAPTER XXIIL 


On Exportation. 


WHAT does the word exportation signify ? 

It signifies the selling and sending the indigenous 
productions of a country to foreign countries. 

Ts it beneficial to a country to sell abroad its indigen- 
ous products 2 

No doubt it is ; for that multiplies its affairs, and its 
lucrative relations, which are always beneficial; and 
also it procures in return merchandise which we may 
seek for in vain in our own country, or which would 
cost much more. 

Does not a nation gain more by selling to strangers 
than to its own people 2 | 

No; an internal market, when it produces the same 
profits as an external one, is quite as valuable to the 
nation, and is a better sign of increasing prosperity 
than exportation itself. In fact, if your fellow country- 


ON EXPORTATION. 197 


men buy your goods, it is a proof that they produce 
something with which they can pay for them. 

When a stranger travels into another country, and 
spends his money there, does not that country gain all 
the money he leaves behind ? 

The country gains, in that case, the value of the 
money which it has received from the traveller less 

/ than)the value of the things which have been delivered 
to him in exchange for his money : for the value of 
what is given to him is as real as the value of the mo- 
ney received. The expenditure of a stranger produces 
an effect similar to an exportation of merchandise 
which is paid for in money. 

The profits made on this production are gained, and 
these profits are generally advantageous ; because a 
traveller cannot dispute the prices of what is sold to 
him as rigorously as the foreign merchant who pur- 
chases the merchandise of a country. 

1s tt beneficial to expend money in order to attract 

Soreigners ? 

What is spent with this view diminishes by so much 
the profit of the sales which are made to them; exact- 
ly as the premiums and rewards which are given to 
encourage exportation, are so much taken from the 
profits which result from it, and sometimes even ex- 

* ceed them. 

Why do most nations and most governments (which 


act in this case agreeably to the desires of those nations) 


128 ON EXPORTATION. 


endeavour by every means to increase the quantity of 
merchandise which they eaport to strangers, and to 
limit the quantity of those which they purchase from 
them ? 
It is because they are unacquainted with the true 
source of riches. | 
What is, according to them, the source of riches ? 
The mines of gold and silver ; and, as these are not 
in our country, they think that they cannot become 
rich without selling to foreigners merchandise of their 
own production, and compelling them to pay for them 
in the precious metals. 
On what do they found this opinion 2° 
Ona merchant not gaining any thing on his mer- 
chandise until it is sent out of his warehouse, at which 
time he exchanges it for gold or silver money. 
IV hy does a nation, in regard to other nations, differ 
Jirom a merchant in regard to his customers 2 
A merchant like a nation, sells his products only to 
repurchase others, which are either necessary for his 
consumption, or fit for the continuation of his com- 
merce. But a merchant does not find in his customer, 
precisely the man who can furnish him with the goods 
or materials which he wants, and at the most advan- 
tageous price. It is only with the money of the buyer 
that he can himself buy what he wants, and in the 
quantities that are convenient to him. 


Tt is not the same between one nation and another. 


ON EXPORTATION. 129 


The merchants, who are the agents of this communi- 


cation, by the variety and the facility of their opera- 
tions, are enabled to bring back in return for what they 
send out, merchandise, which, if not useful to the deal- 
er, whose products they have exported, will at least be 
so to some other. The last, in paying for it, will pro- 
vide the means of paying the first. 

The interest of merchants, in all these operations, is 
to obtain in return such merchandise as is most in de- 
mand, because it will sell the best. 

Would it not be still better that a neighbouring nation 
should pay us in money rather than in goods 2 

You do not desire this money, but in order to use it 
in the purchase of goods of which you are in want. 

That is true; but when I have the money, I am at 
liberty to employ it in the purchase of whatever I think 
proper. 

A foreign nation which pays you in merchandise, 
gives you only such merchandise as you are willing to. 
receive ; for you are at liberty to purchase in return 
whatever you please. 

But when she pays usin merchandise, this merchandise 
2s consumed, andwe lose the value of it ; a loss which we 
should not have suffered, if she had paid us in money. 

The loss you suffer does not arise from the impor- 
tation, but from the consumption, of the merchandise. 
If at the close of an external commercial operation, 


there be a value consumed under the form of cham- 


(17) 


130 ON EXPORTATION. 


pagn, the loss is not greater than when, at the close 
of an internal commercial operation, the same value 
has been consumed in cder. 

The cider would at least have been a product of the 
national industry. 

The foreign goods are equally products of the na- 
tional industry, since they are products of its com- 
merce. 

How does foreign commerce procure new values, new 
riches, since we must always give foreigners a merchan- 
dise of equal value to that which they give us ? 

Anexample will make you understand this. A mer- 
chant sends stuffs to Brazil. He obtains in that coun- 
try, in exchange for his stuffs, a greater value than he 
gave for them in Europe, because they have gained 
by the carriage. ‘This value which he has gained, he 
there exchanges for cotton, which he brings back to 
Europe, the value of which is also augmented by the 
carriage. When these operations are finished, although 
the merchant has exchanged, in each place, his mer- 
chandise at the current price; that is, value for value; 
still, as the value of the different products has increa- 
sed while they were in his hands, he has, without rob- 
bing the stranger of any value, brought back to his 
own country a value superior to that which he had ex- 
ported; which is equivalent to a value created in the 
country. 


ON EXPORTATION. 131 


Every augmentation of riches, even in external com- 
merce, 1s then the fruit of an internal production 2 

Yes, with the exception of plunder, in exchange for 
which nothing is given. But besides spoliation being 
criminal, because it is contrary to justice, it is odious, 
and consequently dangerous, and the advantages which 
it procures are uncertain, temporary, and scarcely ever 
profitable. 

Why do you say, scarcely ever profitable 2 

Because when we seize upon goods created by 
others, we rob them at the same time of the means of 
continuing to create new ones : and we can only enjoy 
them for once, as when we cut down a tree to get at 
its fruit. The goods thus obtained are, besides, of 
every little profit ; because they are seldom obtained 
when wanted, or when they could be used to advan- 
tege, but must be taken when they can be got. They 
may be carried off ; but the carriage itself constitutes 
a great part, and sometimes the whole of their value. 
They are consumed; and generally the greater part 
of them, on the spot; they are wasted rather than 
used, and their consumption often creates more evil 


than good. 


132 


CHAPTER XXIV. 
On Population. 


WHAT are the causes which increase or diminish 
the population of a country ? 

In general a country is so much the more populous 
as it produces more values or riches for the mainte- 
nance of its inhabitants; and so much the less so, as 
it produces less riches. 

Why do not you say more of the commodities proper 
Sor the food of men? | 

Because there are commodities, which, without be- 
ing alimentary, are necessary to life, as clothes and 
lodging; and because with those which are not alimen- 
tary, we can procure, by means of commerce and ex- 
change, those which are. It is sufficient for a country 


to produce values to enable it to exist. The nature of 


ON POPULATION. 198 


the values will immediately accommodate itself to its 
wants; for the commodities of which it stands in the 
greatest need, are those for which it will pay best; and 
the good price they will then obtain will cause them to 
become abundant. 

But when war or bad laws prevent the arrival of ar- 
ticles of the first necessity, such as those which serve 
for subsistence, will not the population suffer greatly ? 

It will suffer the same as when crops fail in bad 
years. 

Without supposing any scourge on the part of men 
or of nature, if the number of births eacceed what the 
products of a nation can nourish, what will be the con- 
sequence ? 

It will necessarily follow, that part of those born, will 
perish of want, either in childhood or at a riper age. 
This evil exists at all times, more or less; because the 
human species, like all other organised beings, has 
more means of increase than it has of maintenance. 
Want does not instantly kill : but it gradually wastes. 
Few people die for the want of food, but for want of 
food.sufficiently abundant or sufficiently wholesome ; 
for want of medicine in illness; for want of cleanliness ; 
for want of rest; for want of dry and warm lodging; 
and for want of those attentions which we cannot do 
without in infirmity andoldage. From the moment 
that any one of these objects becomes necessary to 


134 ON POPULATION. 


them, and they cannot obtain it, they languish for a 
greater or less period, and sink at the first shock. 

Who first feel the want of the necessaries of life ? 

The scarcity of one or other of these means of ex- 

istence, first raises the price of it. It thus gets out of 
the reach, first of the most indigent: and as the scar- 
city and dearness increase, the greater is the number 
of those who suffer from its privation. 
- Do not wars, epidemics, and, in general, those plagues 
which cut off great numbers of men, enable those whe 
are left to enjoy a greater quantity of those commodities 
of which they are in want ?— 

The scourges, in destroying men, destroy at the 
same time the means of production. And we do not 
see that, in countries thinly populated, the wants of 
the inhabitants are more easily satisfied. It is the 
abundance of productions, and not the scarcity of con- 
sumers, which procures a plentiful supply of whatever 
our necessities require ; and the most populous coun- 
tries are in general the best supplied. 

‘i W hat is it that induces men to assemble together in 
villages, towns, or cities ? 

The nature of their occupations. Those who culti- 
vate the earth, spread themselves all over the country, 
in order to be near their employment, and to have a 
small distance to carry their crops at harvest time. 
Those who carry on rhanufactories, place themselves 


ON POPULATION. 185 


‘in towns, where they find at hand the materials, uten- 

sils, and the artisans of which they are frequently in 
want. Those who engage in commerce place them- 
selves either in the sea-ports, where the merchandise 
arrives more easily, or on the roads by which it is dis- 
tributed through various provinces or countries. 
Those who produce by means of their lands, but with- 
out employing them themselves, being able to expend 
their incomes in any place whatever, live where they 
please, but generally in cities, where they find greater 
resources and amusements of every kind. It is the 
same with those whose profits are founded on immate- 
rial products ; which, not being transportable, are 
therefore consumed chiefly in places where a number 
of persons are collected together. It is for this reason, 
that we meet with so many physicians, advocates, and 
public functionaries in great cities. - 

Are not great cities a burden to a nation, since they 
must be provisioned by the country ? 

By no means: for the inhabitants of cities have in- 
comes equally real with the inhabitants of the country. 
They do not live at the expense of the latter ; as they 
do not receive from them any value without giving 
them another value in exchange. And the country 
cannot have markets more certain or more extensive 


than the cities, to which they present in their turn, 


1386 ON POPULATION. 


when well cultivated and they are able to purchase 
much, important markets for the products of manufac- 
ture and commerce. Thus there is not a more cer- 
tain indication of the riches and great revenues of a 


country, than numerous and extensive cities. 





137 


CHAPTER XXyV. 


On Colonies. 


WHAT do you mean by Colonies ? 

Establishments which the inhabitants of one coun- 
try form in another land, in order to live there more 
at ease. 

Are there different kinds of colonies 2 

They may either be dependent or independent of 
the metropolis. ‘The metropolis is the nation from 
which the colony went forth. 

W hat do you mean by colonies dependent on the me- 
tropolis, or mother country 2 

I understand those which are subject to the same 
government, and governed by laws which it imposes 
on them. 

W hat effect has this dependence on the relative riches 
of the colonies and the metropolis 2 

That the metropolis can compel the colony to pur- 


chase from her every thing it may have occasion for ; 


( 18 ) 


138 ON COLONIES. 


that this monopoly, or this exclusive privilege, enables 


the producers of the metropolis to make the colonists 
pay more for the merchandise than it is worth. 

The metropolis, then, gains more from the colony than 
if she were independent ? 

Yes; but all that the tradesmen and merchants of 
the metropolis sell too dear, is paid for too dear by the 
colonial consumers. It is a value which has gone from 
the purse of one individual to that of another, both citi- 
zens or subjects of the same country. These values 
appear a great deal in the hands of those who gain 
them, because they are but few; and small to those 
who pay them, because they are divided amongst many 
individuals: but.the loss is not the less to the colony, 
which is so much the poorer by it. 

Are not the colonies indemnified in some other manner 
Sor the usurious gains which are made from them ? 

They make in their turn an usurious gain on the 
consumptions of the metropolis, which is not permit- 
ted to purchase from any other than them, the colonial 
product of which it is in want. On the one side and 
on the other, it is a combination, or conspiracy of the 
producers against the consumers. 

Are there any other inconveniences attending de- 
pendent colonies ? 

Their administration is generally corrupt and: ex- 
pensive, because it is superintended from too great a 
distance: and the metropolis is obliged to keep up 


ON COLONIES. 139 


garrisons, and military and naval forces, either to en- 
able it to hold, or to defend them. And these expenses 
increase the burdens, either of the people of the colo- 
ny, or of those of the metropolis, without taking into 
account the wars which are always brought on by 
such an order of things. 

Do these evils take place when the colonies are inde- 
pendent ? 
"Never. They establish a government for themselves 
which costs them very little. They are no expense to 
the metropolis ; and the one and the other, the metro- 
polis and the colony, enjoy the advantages which two 
civilized nations derive from their reciprocal commu- 
nications. 


FINIS. 


INDEX. re 


ACTORS, 50, 51. 

Agents of production, 25, 34, 35. 
a, Natural, 13, 34535, 85. 
Agriculture—See Industry. 

Anticipation, 84. 

Artisan, 18. 

Avyarice, 63. 


Bank Notes, 105, 106, 107. 
Billon, 102. 

Bond (Loan) 83. 

Buildings, Public, 68, 69, 70. 


Carrraz, 24, 25, 26, 27, 30, 31, 32, 33, 34, 35, 42, 43, 44, 45, 50, 52, 57, 
58, 59, 60, 61, 63, 72, 73, 81, 84, 87—124. 
—_——., circulating and disposable, 33, 45, 46, 80. 
————.,, Idle, 31. 
——_——-, Appropriated, 52, 33, 52, 124. 
, Formation and Augmentation of, 25, 27, 30, 57, 61, 63. 
, Diminution of 45, 57, 72, 73. 
Capitalists, 35,39, 40, 135. _ 
Charges of Production, 13, 34, 58, 41, 58, 78, 92, 121. 
, Public—See Taxes. ‘ 
Cities, Great, 134, 135. 
Colonies, 137. 
, Independent, 138, 139. 

Combinations, 116, 117, 137, 138. 
Commerce—See Industry. 

» Retail, 19, 40. 

, Internal, 126, 130. 

, External, 126, 129. 
Competition, 67, 77, 117, 118. 
Consume, to, 28. 
Consumer, 13, 35, 39 76, 77, 78, 117, 121, 154 








INDEX. 141 


Consumption, 27, 28, 29, 30, 50, 54, 55, 56, 57, 58, 59, 62, 63, 64, 65, 68, 
- 69, 74, 81, 131 * 
, Productive, 28, 29, 45, 55, 56, 57, 58. 
» Unproductive, 28, 30, 50, 55, 56, 59, 67, 68, 81, 131. 
, Private, 56, 62, 63, 64, 65, 121. 
, Public, 56, 66, 67, 68, 69, 70, 71, 74, 80, 81. 
, Annual, of a Nation, 56, 60. 
Contributions, 67, 68, 82, 121. 
Contributors, 71, 72, 73, 74, 82. 
Corporations, 116, 117. 
Cultivators, 17, 134. 





ee 














Dearness, 41, 75, 76, 90, 91, 94, 138. 

Demand, 13, 34, 35, 36, 54, 75, 88, 97, 111, 113. 
Discount, 84, 106. 

Distribution, 38, 39, 40, 61. 

Duties, Import, 75, 120, 121, 122. 


Economy, 63, 64, 70. 

Exchange, 10, 110. 

, Medium of, 10. 

——_—, Bills of, 105, 106. 

————, Course of, 106. 

————., Par of, 106. 

Expenses, 62—See Charges and Consumption. 
Expenditure, Public, 66, 67, 68, 69, 70. 
Exportation, 57, 113, 126. 





Fatt of Price, 93. 

Farmer, 36. 

Fees, 50. 

Fishing, 16. 

Functionary, Public, 50, 66. 
Fund, Sinking, 86. 


Gortp—See Metals. 
Gratuities—See Fees. 


Hasirts and Customs, 22, 43. 


ImmatTertat Products, 49, 50, 51, 52, 53. 
Importation, 57,75, 120. 

Impost—See Tax. 

Income, 38, 40, 49, 72, 73, 76, 78, 82, 86, 91, 93, 134. 
, Augmentation of, 41, 123. 





142 INDEX. 


Income, Diminution of, 81, 82, 83. 

, Annual, of a Nation, 40, 72, 79, 81. 

Industrious, 23, 39. 

Industry, 14, 16, 17, 18, 19, 20, 21, 22, 23, 28, 34, 36, 51, 74, 78, 115, 122. 
Agricultural, 16, 119. 

, Commercial, 18, 19, 29, 74, 116, 122, 123, 128, 129, 130. 

———_., Manufacturing, 17, 22, 29, 39, 74, 115, 122, 123. 

, Restraints on, 79, 97, 115, 116, 117, 118. 

Operations common to all, 21. 

Interest, 36, 43, 44, 45, 46, 47. 

» Legal, 47. 

, on Public Loans, 80, 83. 

Inventory, 26, 59. 

Judges, 50, 66. 























Lanp, 9, 24, 25, 31, 32, 34, 35, 38, 47, 53, 74, 77, 87. 
Laws, Moral, 21, 22. 

, Physical, 21. 

Learned Men, 23. 

Loans, Public, 80, 81, 82, 83, 84, 85. 





Macurnses, 42, 43, 94. 
Manufacturer, 18, 20, 21, 23, 134, 
Manufactures. See Industry. 
Markets, 110, 135. 

, External, 113, 126, 129. 

, Internal, 126, 130, 135. 
Medium, Circulating, 10, 103, 108. 
Merchandise, 9, 10, 29, 31, 57, 74, 113, 128, 129. 

, fall of Price of, 75, 91, 82, 93, 97, 98. 
, rise of Price of, 41, 75, 76, 94, 118, 1253. 
—_—_—__—__,, nominal and real Price of, 41, 90. 
Merchant, 18, 29, 51, 128, 130, 134. 
Metals, Precious, 9, 11, 98, 99, 102. 
Metropolis, 137, 139. 
Mining, 16. 
Money, 9, 10, 11, 14, 24, 41, 46, 91, 96, 97, 100, 101, 102, 108, 128, 129. 
, Alteration of, 98, 100, 101, 109. ’ 

, Exportation of, 101. 
, Paper, 105, 107, 109. 
, Signs representing, 11, 105. 














OrreR. See Demand and Price. 


Parrr Money. See Money. 


INDEX. 


Physician, 49. 

Plunder. See Rapine. 

Population, 122, 132. 

Poverty, 89. 

Premium, 115, 127. 

Price, offer of, 13, 34, 36. 

, nominal, 90, 98, 100. 

——, real, 90. 

, fall of, 75, 91, 93, 97, 98. 

, rise of, 41, 75, 94, 109, 123. 
Priests, 50, 51. 

Produce, to, 12, 15, 16. 

Producers, 13, 35, 36, 39, 76, 77, 78, 112, 121. 











Product, 13, 14, 34, 36, 42, 49, 52, 53, 60, 69, 76, 87, 88, 89, 111. 


Production, 16, 27, 41, 42, 58, 73, 121, 122, 123. 

, Annual, 72. 

, Annual of a Nation, 60. 

Profits, 13, 26, 37, 38, 40, 41, 60, 121, 130, 131. 
Prohibitions, 115, 116, 120, 121, 122, 123, 124, 125. 
Property, 32, 35, 86. 

————, Public, 71. 

Proprietor, landed, 35, 40, 77, 134. 

Prosperity, Taxes destructive of, 74, 77. 
Provisions, 41, 132, 133. 





Raping, 131. 

Restraint. See Industry. 

Rent, 36, 41, 43, 47. 

Revenue, Public, 71, 79. 

Riches. See Wealth. 

Riches, height of, 89. 

Riches, supposed Source of, 128. 
Risk, 44, 106. 


Saxe or Orrices, 84. ca 


Savings, 25, 63, 73. 

Services, Productive, 23, 35, 41, 44, 52, 75. 
Shells, 11. 

Signs of Money, 11, 105. 

Silver. See Metals and Money. 

Soldiers, 51, 66. 

Stock, 86, 87. 


Taxents, 24, 27, 63, 87. 
Taxation, Subjects of, 78. 


143 



























Gh EMME. aR Pero wo, eet 
— not the income of a Nation, 79, . 
direct, 74, 77. ; aon 
indirect, 74, 75, 76. rie 
impoverish a Nation, 74, 77. 

wi _— suppression of, 123. a ‘i 
See duties. — ; eee We 
ie | Travellers, 11, 127. ih. a * . 





if 


Taceereeen: 21, 22, 23, 24, 29, 36, 99, 43, 49, pee 
- Utensils, 24, 25, 29. ce "ee 


lity, 13, 14, 16, 19, 27,28, 94, 54, 70 96, 1 a : 
2 So 9,10, 13, 19, 20, 25, 45,87,88. 
| ——— variations in, 92, 93, 94, 95. . 


of Money, 91, 96, 97, 100, 101. 
Vanity 15, 22. 


A _ Wases, 36, 40, 43. pe e ge th 
+8 “wants, 15, 22, 49, 54, 56, 64, 87, 133. 
PS war, 133, 134. “ni 
te Wealth, 9, 14,15, 20, 51, 52, 55, 61, 79, 81, 26, 
| Morne, 18, 23, 29, 40, 43, 68, 69, 70, 117. 


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